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BACASEN, BERNALYN P.

DT/SHT 2 November 25, 2017

INSOLVENCY

1. DEFINITION OF INSOLVENCY
LAD

LB AM NO. 12-12-11 SEC 5 (K)


2. SUSPENSION OF PAYMENTS
LAD

SECTION 94. PETITION. - AN INDIVIDUAL DEBTOR WHO, POSSESSING SUFFICIENT


PROPERTY TO COVER ALL
HIS DEBTS BUT FORESEEING THE IMPOSSIBILITY OF MEETING THEM WHEN THEY
RESPECTIVELY FALL DUE,
MAY FILE A VERIFIED PETITION THAT HE BE DECLARED IN THE STATE OF SUSPENSION
OF PAYMENTS BY THE
COURT OF THE PROVINCE OR CITY IN WHICH HE HAS RESIDES FOR SIX (6) MONTHS
PRIOR TO THE FILING OF
HIS PETITION. HE SHALL ATTACH TO HIS PETITION, AS A MINIMUM: (A) A SCHEDULE OF
DEBTS AND
LIABILITIES; (B) AN INVENTORY OF ASSESS; AND (C) A PROPOSED AGREEMENT WITH
HIS CREDITORS.
SECTION 95. ACTION ON THE PETITION. - IF THE COURT FINDS THE PETITION
SUFFICIENT IN FORM AND
SUBSTANCE, IT SHALL, WITHIN FIVE (5) WORKING DAYS FROM THE FILING OF THE
PETITION, ISSUE AN ORDER:
(A) CALLING A MEETING OF ALL THE CREDITORS NAMED IN THE SCHEDULE OF DEBTS
AND LIABILITIES
AT SUCH TIME NOT LESS THAN FIFTEEN (15) DAYS NOR MORE THAN FORTY (40) DAYS
FROM THE DATE
OF SUCH ORDER AND DESIGNATING THE DATE, TIME AND PLACE OF THE MEETING;
(B) DIRECTING SUCH CREDITORS TO PREPARE AND PRESENT WRITTEN EVIDENCE OF
THEIR CLAIMS
BEFORE THE SCHEDULED CREDITORS' MEETING;
(C) DIRECTING THE PUBLICATION OF THE SAID ORDER IN A NEWSPAPER OF GENERAL
CIRCULATION
PUBLISHED IN THE PROVINCE OR CITY IN WHICH THE PETITION IS FILED ONCE A WEEK
FOR TWO (2)
CONSECUTIVE WEEKS, WITH THE FIRST PUBLICATION TO BE MADE WITHIN SEVEN (7)
DAYS FROM
THE TIME OF THE ISSUANCE OF THE ORDER;
(D) DIRECTING THE CLERK OF COURT TO CAUSE THE SENDING OF A COPY OF THE
ORDER BY

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REGISTERED MAIL, POSTAGE PREPAID, TO ALL CREDITORS NAMED IN THE SCHEDULE
OF DEBTS AND
LIABILITIES;
(E) FORBIDDING THE INDIVIDUAL DEBTOR FROM SELLING, TRANSFERRING,
ENCUMBERING OR
DISPOSING IN ANY MANNER OF HIS PROPERTY, EXCEPT THOSE USED IN THE ORDINARY
OPERATIONS
OF COMMERCE OR OF INDUSTRY IN WHICH THE PETITIONING INDIVIDUAL DEBTOR IS
ENGAGED SO
LONG AS THE PROCEEDINGS RELATIVE TO THE SUSPENSION OF PAYMENTS ARE
PENDING;
(F) PROHIBITING THE INDIVIDUAL DEBTOR FROM MAKING ANY PAYMENT OUTSIDE OF
THE
NECESSARY OR LEGITIMATE EXPENSES OF HIS BUSINESS OR INDUSTRY, SO LONG AS THE
PROCEEDINGS RELATIVE TO THE SUSPENSION OF PAYMENTS ARE PENDING; AND
(G) APPOINTING A COMMISSIONER TO PRESIDE OVER THE CREDITORS' MEETING.
SECTION 96. ACTIONS SUSPENDED. - UPON MOTION FILED BY THE INDIVIDUAL DEBTOR,
THE COURT MAY
ISSUE AN ORDER SUSPENDING ANY PENDING EXECUTION AGAINST THE INDIVIDUAL
DEBTOR. PROVIDE, THAT
PROPERTIES HELD AS SECURITY BY SECURED CREDITORS SHALL NOT BE THE SUBJECT
OF SUCH SUSPENSION
ORDER. THE SUSPENSION ORDER SHALL LAPSE WHEN THREE (3) MONTHS SHALL HAVE
PASSED WITHOUT THE
PROPOSED AGREEMENT BEING ACCEPTED BY THE CREDITORS OR AS SOON AS SUCH
AGREEMENT IS DENIED.
NO CREDITOR SHALL SUE OR INSTITUTE PROCEEDINGS TO COLLECT HIS CLAIM FROM
THE DEBTOR FROM THE
TIME OF THE FILING OF THE PETITION FOR SUSPENSION OF PAYMENTS AND FOR AS
LONG AS PROCEEDINGS
REMAIN PENDING EXCEPT:
(A) THOSE CREDITORS HAVING CLAIMS FOR PERSONAL LABOR, MAINTENANCE,
EXPENSE OF LAST
ILLNESS AND FUNERAL OF THE WIFE OR CHILDREN OF THE DEBTOR INCURRED IN THE
SIXTY (60) DAYS
IMMEDIATELY PRIOR TO THE FILING OF THE PETITION; AND
(B) SECURED CREDITORS.
SECTION 97. CREDITORS' MEETING. - THE PRESENCE OF CREDITORS HOLDING CLAIMS
AMOUNTING TO AT
LEAST THREE-FIFTHS (3/5) OF THE LIABILITIES SHALL BE NECESSARY FOR HOLDING A
MEETING. THE
COMMISSIONER APPOINTED BY THE COURT SHALL PRESIDE OVER THE MEETING AND
THE CLERK OF COURT
SHALL ACT AS THE SECRETARY THEREOF, SUBJECT TO THE FOLLOWING RULES:
(A) THE CLERK SHALL RECORD THE CREDITORS PRESENT AND AMOUNT OF THEIR
RESPECTIVE CLAIMS;
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(B) THE COMMISSIONER SHALL EXAMINE THE WRITTEN EVIDENCE OF THE CLAIMS. IF
THE
CREDITORS PRESENT HOLD AT LEAST THREE-FIFTHS (3/5) OF THE LIABILITIES OF THE
INDIVIDUAL
DEBTOR, THE COMMISSIONER SHALL DECLARE THE MEETING OPEN FOR BUSINESS;
(C) THE CREDITORS AND INDIVIDUAL DEBTOR SHALL DISCUSS THE PROPOSITIONS IN
THE PROPOSED
AGREEMENT AND PUT THEM TO A VOTE;
(D) TO FORM A MAJORITY, IT IS NECESSARY:
(1) THAT TWO-THIRDS (2/3) OF THE CREDITORS VOTING UNITE UPON THE SAME
PROPOSITION; AND
(2) THAT THE CLAIMS REPRESENTED BY SAID MAJORITY VOTE AMOUNT TO AT LEAST
THREEFIFTHS
(3/5) OF THE TOTAL LIABILITIES OF THE DEBTOR MENTIONED IN THE PETITION; AND
(E) AFTER THE RESULT OF THE VOTING HAS BEEN ANNOUNCED, ALL PROTESTS MADE
AGAINST THE
MAJORITY VOTE SHALL BE DRAWN UP, AND THE COMMISSIONER AND THE INDIVIDUAL
DEBTOR
TOGETHER WITH ALL CREDITORS TAKING PART IN THE VOTING SHALL SIGN THE
AFFIRMED
PROPOSITIONS.
NO CREDITOR WHO INCURRED HIS CREDIT WITHIN NINETY (90) DAYS PRIOR TO THE
FILING OF THE PETITION
SHALL BE ENTITLED TO VOTE.
SECTION 98. PERSONS WHO MAY REFRAIN FROM VOTING. - CREDITORS WHO ARE
UNAFFECTED BY THE
SUSPENSION ORDER MAY REFRAIN FROM ATTENDING THE MEETING AND FROM VOTING
THEREIN. SUCH
PERSONS SHALL NOT BE BOUND BY ANY AGREEMENT DETERMINED UPON AT SUCH
MEETING, BUT IF THEY
SHOULD JOIN IN THE VOTING THEY SHALL BE BOUND IN THE SAME MANNER AS ARE
THE OTHER CREDITORS.
SECTION 99. REJECTION OF THE PROPOSED AGREEMENT. - THE PROPOSED AGREEMENT
SHALL BE DEEMED
REJECTED IF THE NUMBER OF CREDITORS REQUIRED FOR HOLDING A MEETING DO NOT
ATTEND THEREAT, OR IF
THE TWO (2) MAJORITIES MENTIONED IN SECTION 97 HEREOF ARE NOT IN FAVOR
THEREOF. IN SUCH
INSTANCES, THE PROCEEDING SHALL BE TERMINATED WITHOUT RECOURSE AND THE
PARTIES CONCERNED SHALL
BE AT LIBERTY TO ENFORCE THE RIGHTS WHICH MAY CORRESPOND TO THEM.
SECTION 100. OBJECTIONS. - IF THE PROPOSAL OF THE INDIVIDUAL DEBTOR, OR ANY
AMENDMENT THEREOF
MADE DURING THE CREDITORS' MEETING, IS APPROVED BY THE MAJORITY OF
CREDITORS IN ACCORDANCE

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WITH SECTION 97 HEREOF, ANY CREDITOR WHO ATTENDED THE MEETING AND WHO
DISSENTED FROM AND
PROTESTED AGAINST THE VOTE OF THE MAJORITY MAY FILE AN OBJECTION WITH THE
COURT WITHIN TEN (10)
DAYS FROM THE DATE OF THE LAST CREDITORS' MEETING. THE CAUSES FOR WHICH
OBJECTION MAY BE MADE
TO THE DECISION MADE BY THE MAJORITY DURING THE MEETING SHALL BE: (A)
DEFECTS IN THE CALL FOR THE
MEETING, IN THE HOLDING THEREOF AND IN THE DELIBERATIONS HAD THEREAT
WHICH PREJUDICE THE RIGHTS
OF THE CREDITORS; (B) FRAUDULENT CONNIVANCE BETWEEN ONE OR MORE
CREDITORS AND THE INDIVIDUAL
DEBTOR TO VOTE IN FAVOR OF THE PROPOSED AGREEMENT; OR (C) FRAUDULENT
CONVEYANCE OF CLAIMS FOR
THE PURPOSE OF OBTAINING A MAJORITY. THE COURT SHALL HEAR AND PASS UPON
SUCH OBJECTION AS
SOON AS POSSIBLE AND IN A SUMMARY MANNER.
IN CASE THE DECISION OF THE MAJORITY OF CREDITORS TO APPROVE THE INDIVIDUAL
DEBTOR'S PROPOSAL OR
ANY AMENDMENT THEREOF MADE DURING THE CREDITORS' MEETING IS ANNULLED BY
THE COURT, THE COURT
SHALL DECLARE THE PROCEEDINGS TERMINATED AND THE CREDITORS SHALL BE AT
LIBERTY TO EXERCISE THE
RIGHTS WHICH MAY CORRESPOND TO THEM.
SECTION 101. EFFECTS OF APPROVAL OF PROPOSED AGREEMENT. - IF THE DECISION OF
THE MAJORITY OF
THE CREDITORS TO APPROVE THE PROPOSED AGREEMENT OR ANY AMENDMENT
THEREOF MADE DURING THE
CREDITORS' MEETING IS UPHOLD BY THE COURT, OR WHEN NO OPPOSITION OR
OBJECTION TO SAID DECISION
HAS BEEN PRESENTED, THE COURT SHALL ORDER THAT THE AGREEMENT BE CARRIED
OUT AND ALL PARTIES
BOUND THEREBY TO COMPLY WITH ITS TERMS.
THE COURT MAY ALSO ISSUE ALL ORDERS WHICH MAY BE NECESSARY OR PROPER TO
ENFORCE THE
AGREEMENT ON MOTION OF ANY AFFECTED PARTY. THE ORDER CONFIRMING THE
APPROVAL OF THE
PROPOSED AGREEMENT OR ANY AMENDMENT THEREOF MADE DURING THE
CREDITORS' MEETING SHALL BE
BINDING UPON ALL CREDITORS WHOSE CLAIMS ARE INCLUDED IN THE SCHEDULE OF
DEBTS AND LIABILITIES
SUBMITTED BY THE INDIVIDUAL DEBTOR AND WHO WERE PROPERLY SUMMONED, BUT
NOT UPON: (A) THOSE
CREDITORS HAVING CLAIMS FOR PERSONAL LABOR, MAINTENANCE, EXPENSES OF LAST
ILLNESS AND FUNERAL

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OF THE WIFE OR CHILDREN OF THE DEBTOR INCURRED IN THE SIXTY (60) DAYS
IMMEDIATELY PRIOR TO THE
FILING OF THE PETITION; AND (B) SECURED CREDITORS WHO FAILED TO ATTEND THE
MEETING OR REFRAINED
FROM VOTING THEREIN.
SECTION 102. FAILURE OF INDIVIDUAL DEBTOR TO PERFORM AGREEMENT. - IF THE
INDIVIDUAL DEBTOR
FAILS, WHOLLY OR IN PART, TO PERFORM THE AGREEMENT DECIDED UPON AT THE
MEETING OF THE
CREDITORS, ALL THE RIGHTS WHICH THE CREDITORS HAD AGAINST THE INDIVIDUAL
DEBTOR BEFORE THE
AGREEMENT SHALL REVEST IN THEM. IN SUCH CASE THE INDIVIDUAL DEBTOR MAY BE
MADE SUBJECT TO THE
INSOLVENCY PROCEEDINGS IN THE MANNER ESTABLISHED BY THIS ACT.

LB RA 10142 CHAPTER VI(A) SEC 94-102

3. VOLUNTARY INSOLVENCY

LAD
SECTION 14. APPLICATION. - AN INSOLVENT DEBTOR, OWING DEBTS EXCEEDING IN
AMOUNT THE SUM OF ONE THOUSAND PESOS, MAY APPLY TO BE DISCHARGED FROM
HIS DEBTS AND LIABILITIES BY PETITION TO THE COURT OF FIRST INSTANCE OF
PROVINCE OR CITY IN WHICH HE HAS RESIDED FOR SIX MONTHS NEXT PRECEDING THE
FILING OF SUCH PETITION. IN HIS PETITION HE SHALL SET FORTH HIS OF RESIDENCE,
THE PERIOD OF HIS RESIDENCE THEREIN IMMEDIATELY PRIOR TO FILING SAID
PETITION, HIS INABILITY TO PAY ALL HIS DEBTS IN FULL, HIS WILLINGNESS TO
SURRENDER ALL HIS PROPERTY, ESTATE, AND EFFECTS NOT EXEMPT FROM EXECUTION
FOR THE BENEFIT OF HIS CREDITORS, AND AN APPLICATION TO BE ADJUDGED AN
INSOLVENT. HE SHALL ANNEX TO HIS PETITION A SCHEDULE AND INVENTORY IN THE
FORM HEREIN-AFTER PROVIDED. THE FILING OF SUCH PETITION SHALL BE AN ACT OF
INSOLVENCY.
SECTION 15. STATEMENT OF DEBTS AND LIABILITIES. - SAID SCHEDULE MUST CONTAIN A
FULL AND TRUE STATEMENT OF ALL HIS DEBTS AND LIABILITIES, TOGETHER WITH A
LIST OF ALL THOSE TO WHOM, TO THE BEST OF HIS KNOWLEDGE AND BELIEF, SAID
DEBTS OR LIABILITIES ARE DUE, THE PLACE OF RESIDENCE OF HIS CREDITORS AND THE
SUM DUE EACH THE NATURE OF THE INDEBTEDNESS OR LIABILITY AND WHETHER
FOUNDED ON WRITTEN SECURITY, OBLIGATION, CONTRACT OR OTHERWISE, THE TRUE
CAUSE AND CONSIDERATION THEREOF, THE TIME AND PLACE WHEN AND WHERE SUCH
INDEBTEDNESS OR LIABILITY ACCRUED, A DECLARATION OF ANY EXISTING PLEDGE,
LIEN, MORTGAGE, JUDGMENT, OR OTHER SECURITY FOR THE PAYMENT OF THE DEBT
OR LIABILITY, AND AN OUTLINE OF THE FACTS GIVING RISE OR WHICH MIGHT GIVE RISE
TO A CAUSE OF ACTION AGAINST SUCH INSOLVENT DEBTOR.
SECTION 16. DESCRIPTION OF REAL AND PERSONAL PROPERTY. - SAID INVENTORY MUST
CONTAIN, BESIDES THE CREDITORS, AN ACCURATE DESCRIPTION OF ALL THE REAL AND
PERSONAL PROPERTY, ESTATE, AND EFFECTS OF THE PETITIONER, INCLUDING HIS

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HOMESTEAD, IF ANY, TOGETHER WITH A STATEMENT OF THE VALUE OF EACH ITEM OF
SAID PROPERTY, ESTATE, AND EFFECTS AND ITS LOCATION, AND A STATEMENT OF THE
INCUMBRANCES THEREON. ALL PROPERTY EXEMPT BY LAW FROM EXECUTION 2 SHALL
BE SET OUT IN SAID INVENTORY WITH A STATEMENT OF ITS VALUATION, LOCATION,
AND THE INCUMBRANCES THEREON, IF ANY. THE INVENTORY SHALL CONTAIN AN
OUTLINE OF THE FACTS GIVING RISE, OR WHICH MIGHT GIVE RISE, TO A RIGHT OF
ACTION IN FAVOR OF THE INSOLVENT DEBTOR.
SECTION 17. VERIFICATION, FORM OF. - THE PETITION, SCHEDULE, AND INVENTORY
MUST BE VERIFIED BY THE AFFIDAVIT OF THE PETITIONER, ANNEXED THERETO, AND
SHALL BE IN FORM SUBSTANTIALLY AS FOLLOWS: "I, _______________, DO SOLEMNLY
SWEAR THAT THE SCHEDULE AND INVENTORY NOW DELIVERED BY ME CONTAIN A
FULL, CORRECT, AND TRUE DISCOVERY OF ALL MY DEBTS AND LIABILITIES AND OF ALL
GOODS, EFFECTS, ESTATE, AND PROPERTY OF WHATEVER KIND OR CLASS TO ME IN ANY
WAY BELONGING. THE INVENTORY ALSO CONTAINS A FULL, TRUE AND CORRECT
STATEMENT OF ALL DEBTS OWING OR DUE TO ME, OR TO ANY PERSON OR PERSONS IN
TRUST FOR ME AND OF ALL SECURITIES AND CONTRACTS WHEREBY ANY MONEY MAY
HEREAFTER BECOME DUE OR PAYABLE TO ME OR BY OR THROUGH WHICH ANY
BENEFIT OR ADVANTAGE WHATEVER MAY ACCRUE TO ME OR TO MY USE, OR TO ANY
OTHER PERSON OR PERSONS IN TRUST FOR ME. THE SCHEDULE CONTAINS A CLEAR
OUTLINE OF THE FACTS GIVING RISE, OR WHICH MIGHT GIVE RISE, TO A CAUSE OF
ACTION AGAINST ME, AND THE INVENTORY CONTAINS AN OUTLINE OF THE FACTS
GIVING RISE, OR WHICH MIGHT GIVE RISE, TO ANY CAUSE OF ACTION IN MY FAVOR. I
HAD NO LANDS,

LB ACT NO. 1956 CHAPTER III SEC 14-19

4. INVOLUNTARY INSOLVENCY
LAD CHAPTER IV INVOLUNTARY INSOLVENCY
SECTION 20. PETITION; ACTS OF INSOLVENCY. - AN ADJUDICATION OF INSOLVENCY MAY
BE MADE ON THE PETITION OF THREE OR MORE CREDITORS, RESIDENTS OF THE
PHILIPPINE ISLANDS WHOSE CREDITS OR DEMANDS ACCRUED IN THE PHILIPPINE
ISLANDS, AND THE AMOUNT OF WHICH CREDITS OR DEMANDS ARE IN THE AGGREGATE
NOT LESS THAN ONE THOUSAND PESOS: PROVIDED, THAT NONE OF SAID CREDITORS
HAS BECOME A CREDITOR BY ASSIGNMENTS, HOWEVER MADE, WITHIN THIRTY DAYS
PRIOR TO THE FILING OF SAID PETITION. SUCH PETITION MUST BE FILED IN THE COURT
OF FIRST INSTANCE OF THE PROVINCE OR CITY IN WHICH THE DEBTOR RESIDES OR HAS
HIS PRINCIPAL PLACE OF BUSINESS, AND MUST BE VERIFIED BY AT LEAST THREE OF

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THE PETITIONERS. THE FOLLOWING SHALL BE CONSIDERED ACTS OF INSOLVENCY, AND
THE PETITION FOR INSOLVENCY SHALL SET FORTH ONE OR MORE OF INSOLVENCY
SUCH ACTS: (1) THAT SUCH PERSON IS ABOUT TO DEPART OR HAS DEPARTED FROM
THE PHILIPPINE ISLANDS, WITH INTENT TO DEFRAUD HIS CREDITORS; (2) THAT BEING
ABSENT FROM THE PHILIPPINE ISLANDS, WITH INTENT TO DEFRAUD HIS CREDITORS,
HE REMAINS ABSENT; (3) THAT HE CONCEALS HIMSELF TO AVOID THE SERVICE OF
LEGAL PROCESS FOR PURPOSE OF HINDERING OR DELAYING OR DEFRAUDING HIS
CREDITORS; (4) THAT HE CONCEALS, OR IS REMOVING, ANY OF HIS PROPERTY TO AVOID
ITS BEING ATTACHED OR TAKEN ON LEGAL PROCESS; (5) THAT HE HAS SUFFERED HIS
PROPERTY TO REMAIN UNDER ATTACHMENT OR LEGAL PROCESS FOR THREE DAYS FOR
THE PURPOSE OF HINDERING OR DELAYING OR DEFRAUDING HIS CREDITORS; (6) THAT
HE HAS CONFESSED OR OFFERED TO ALLOW JUDGMENT IN FAVOR OF ANY CREDITOR
OR CLAIMANT FOR THE PURPOSE OF HINDERING OR DELAYING OR DEFRAUDING ANY
CREDITOR OR CLAIMANT; (7) THAT HE HAS WILLFULLY SUFFERED JUDGMENT TO BE
TAKEN AGAINST HIM BY DEFAULT FOR THE PURPOSE OF HINDERING OR DELAYING OR
DEFRAUDING HIS CREDITORS; (8) THAT HE HAS SUFFERED OR PROCURED HIS
PROPERTY TO BE TAKEN ON LEGAL PROCESS WITH INTENT TO GIVE A PREFERENCE TO
ONE OR MORE OF HIS CREDITORS AND THEREBY HINDER, DELAY, OR DEFRAUD ANY
ONE OF HIS CREDITORS; (9) THAT HE HAS MADE ANY ASSIGNMENT, GIFT, SALE,
CONVEYANCE, OR TRANSFER OF HIS ESTATE, PROPERTY, RIGHTS, OR CREDITS WITH
INTENT TO DELAY, DEFRAUD, OR HINDER HIS CREDITORS; (10) THAT HE HAS, IN
CONTEMPLATION OF INSOLVENCY, MADE ANY PAYMENT, GIFT, GRANT, SALE
CONVEYANCE, OR TRANSFER OF HIS ESTATE, PROPERTY, RIGHTS, OR CREDITS; (11)
THAT BEING A MERCHANT OR TRADESMAN HE HAS GENERALLY DEFAULTED IN THE
PAYMENT OF HIS CURRENT OBLIGATIONS FOR A PERIOD OF THIRTY DAYS; (12) THAT
FOR A PERIOD OF THIRTY DAYS HE HAS FAILED, AFTER DEMAND, TO PAY ANY MONEYS
DEPOSITED WITH HIM OR RECEIVED BY HIM IN A FIDUCIARY CAPACITY; AND (13) THAT
AN EXECUTION HAVING BEEN ISSUED AGAINST HIM ON FINAL JUDGMENT FOR MONEY,
HE SHALL HAVE BEEN FOUND TO BE WITHOUT SUFFICIENT PROPERTY SUBJECT TO
EXECUTION TO SATISFY THE JUDGMENT. THE PETITIONERS MAY, FROM TIME TO TIME,
BY LEAVE OF THE COURT, AMEND AND OR AMENDMENTS TO RELATE BACK TO AND BE
RECEIVED AS EMBRACED IN THE ORIGINAL PETITION. THE SAID PETITION SHALL BE
ACCOMPANIED BY A BOND, 6 APPROVED BY THE COURT, WITH AT LEAST TWO
SURETIES, IN SUCH PENAL SUM AS THE COURT SHALL DIRECT, CONDITIONED THAT IF
THE PETITION IN INSOLVENCY BE DISMISSED BY THE COURT, OR WITHDRAWN BY THE
PETITIONER, OR IF THE DEBTOR SHALL NOT BE DECLARED AN INSOLVENT, THE
PETITIONERS WILL PAY TO THE DEBTOR ALLEGED IN THE PETITION TO BE INSOLVENT
ALL COSTS, EXPENSES, AND DAMAGES OCCASIONED BY THE PROCEEDINGS DENT, THE IN
INSOLVENCY, TOGETHER WITH A REASONABLE COUNSEL FEE TO BE FIXED BY THE
COURT. THE COURT MAY, UPON MOTION, DIRECT THE FILING OF AN ADDITIONAL BOND,
WITH DIFFERENT SURETIES, WHEN DEEMED NECESSARY.
SECTION 21. ORDER TO DEBTOR TO SHOW CAUSE. - UPON THE FILING OF SUCH
CREDITORS' PETITION, THE COURT OR A JUDGE SHALL ISSUE AN ORDER REQUIRING
SUCH DEBTOR TO SHOW CAUSE, AT A TIME AND PLACE TO BE FIXED BY SAID COURT OR
JUDGE, WHY HE SHOULD NOT BE ADJUDGED AN INSOLVENT DEBTOR; AND AT THE SAME
TIME, OR THEREAFTER, UPON GOOD CAUSE SHOWN THEREFOR, SAID COURT OR JUDGE
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MAY MAKE AN ORDER FORBIDDING THE PAYMENT OF ANY DEBTS, AND THE DELIVERY
OF ANY THE COURT PROPERTY BELONGING TO SUCH DEBTOR TO HIM OR TO ANY
OTHER PERSON FOR HIS BENEFIT OR THE TRANSFER OF ANY PROPERTY BY HIM.
SECTION 22. COPIES SERVED ON DEBTOR. - A COPY OF SAID PETITION, WITH A COPY OF
THE ORDER TO SHOW SHALL BE SERVED ON THE DEBTOR, IN THE SAME MANNER AS IS
PROVIDED BY LAW FOR THE SERVICE OF SUMMONS IN CIVIL ACTIONS, BUT SUCH SHALL
BE MADE AT LEAST FIVE DAYS BEFORE THE TIME FIXED FOR THE HEARING: PROVIDED,
THAT IF, FOR ANY REASON, THE SERVICE IS NOT MADE, THE ORDER MAY BE RENEWED,
AND THE TIME AND PLACE OF HEARING CHANGED BY SUPPLEMENTAL ORDER OF THE
COURT. WHENEVER THE DEBTOR ON WHOM SERVICE IS TO BE MADE RESIDES OUT OF
THE PHILIPPINE ISLANDS; OR HAS DEPARTED FROM THE PHILIPPINE ISLANDS; OR CAN
NOT, AFTER DUE DILIGENCE, BE FOUND WITHIN THE PHILIPPINE ISLANDS; OR
CONCEALS HIMSELF TO AVOID THE SERVICE OF THE ORDER TO SHOW CAUSE, OR ANY
OTHER PROCESS OR ORDERS IN THE MATTER; OR IS A FOREIGN CORPORATION HAVING
NO MANAGING OR BUSINESS AGENT, CASHIER, OR SECRETARY WITHIN THE PHILIPPINE
ISLANDS UPON WHOM SERVICE CAN BE MADE, AND SUCH FACTS ARE SHOWN TO THE
COURT OR A JUDGE THEREOF,

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SHALL MAKE AN ORDER THAT THE SERVICE OF SUCH ORDER, OR OTHER PROCESS, BE
MADE BY PUBLICATION, IN THE SAME MANNER, AND WITH THE SAME EFFECT, AS
SERVICE OF SUMMONS BY PUBLICATION IN ORDINARY CIVIL ACTIONS.
SECTION 23. ANSWER TO PETITION. - AT THE TIME FIXED FOR THE HEARING OF SAID
ORDER TO SHOW CAUSE, OR AT ANOTHER TIME TO WHICH SUCH HEARING MAY BE
ADJOURNED, THE DEBTOR MUST ANSWER THE PETITION, OR MAY DEMUR FOR THE
SAME CAUSES AS ARE PROVIDED FOR DEMURRER IN OTHER CASES BY THE CODE OF
CIVIL PROCEDURE. IF HE DEMUR AND THE DEMURRER BE OVERRULED, THE DEBTOR
SHALL IMMEDIATELY ANSWER THE PETITION. SUCH ANSWER SHALL CONTAIN A
SPECIFIC DENIAL OF THE MATERIAL ALLEGATIONS OF THE PETITION CONTROVERTER
BY HIM, AND SHALL BE SWORN TO; AND THE ISSUES RAISED THEREON SHALL BE
PROMPTLY TRIED AND DISPOSED OF. IF, UPON SUCH TRIAL, THE ISSUES ARE FOUND IN
FAVOR OF THE RESPONDENT, THE PROCEEDINGS SHALL BE DISMISSED, AND THE
RESPONDENT SHALL BE ALLOWED ALL COSTS, COUNSEL FEES, EXPENSES, AND
DAMAGES SUSTAINED BY REASON OF THE PROCEEDINGS THEREIN. COUNSEL FEES,
COSTS, EXPENSES, AND DAMAGES SHALL BE FIXED AND ALLOWED BY THE COURT.
SECTION 24. DEFAULT; PAYMENTS TO DEBTOR. - IF THE RESPONDENT SHALL MAKE
DEFAULT, OR IF, AFTER TRIAL, THE ISSUES ARE FOUND IN FAVOR OF THE PETITIONERS,
THE COURT SHALL MAKE AN ORDER ADJUDGING THAT SAID RESPONDENT IS AND WAS,
AT THE TIME OF FILING THE PETITION, AN INSOLVENT DEBTOR AND THAT THE
DEBTOR WAS GUILTY OF THE ACTS AND THINGS CHARGED IN THE PETITION, OR SUCH
OF THEM AS THE COURT MAY FIND TO BE TRUE; AND SHALL REQUIRE SAID DEBTOR,
WITHIN SUCH TIME AS THE COURT MAY DESIGNATE, NOT TO EXCEED THREE DAYS, TO
FILE IN COURT THE SCHEDULE AND INVENTORY PROVIDED FOR IN SECTIONS FIFTEEN
AND SIXTEEN OF THIS ACT, DULY VERIFIED AS REQUIRED OF A PETITIONING DEBTOR:
10 PROVIDED, THAT IN THE AFFIDAVIT OF THE INSOLVENT, TOUCHING HIS PROPERTY
AND ITS DISPOSITION, HE SHALL NOT BE REQUIRED TO SWEAR THAT HE HAS NOT
MADE ANY FRAUDULENT PREFERENCE OR COMMITTED ANY OTHER ACT IN CONFLICT
WITH THE PROVISIONS OF THIS ACT; BUT HE MAY DO SO IF HE DESIRES. SAID ORDER
SHALL FURTHER DIRECT THE SHERIFF OF THE PROVINCE OR CITY WHERE THE
INSOLVENCY PETITION IS FILED, OR THE RECEIVER, IF ONE HAS BEEN THERETOFORE
APPOINTED, TO TAKE POSSESSION OF AND SAFELY KEEP, UNTIL THE APPOINTMENT OF
AN ASSIGNEE, ALL THE DEEDS, VOUCHERS, BOOKS OF ACCOUNT, PAPERS, NOTES, BILLS,
BONDS AND SECURITIES OF THE DEBTOR, AND ALL HIS REAL AND PERSONAL
PROPERTY, ESTATE AND EFFECTS, EXCEPT SUCH AS MAY BE BY LAW EXEMPT FROM
EXECUTION. 11 SAID ORDER SHALL FURTHER FORBID THE PAYMENT TO THE DEBTOR
OF ANY DEBTS DUE TO HIM, AND THE DELIVERY TO THE DEBTOR, OR TO ANY PERSON
FOR HIM, OF ANY PROPERTY BELONGING TO HIM, AND THE TRANSFER OF ANY
PROPERTY BY HIM, AND SHALL FURTHER APPOINT A TIME AND PLACE FOR A MEETING
OF THE CREDITORS TO CHOOSE AN ASSIGNEE OF THE ESTATE. SAID ORDER SHALL
DESIGNATE A NEWSPAPER OF GENERAL CIRCULATION PUBLISHED IN THE PROVINCE OR
CITY IN WHICH THE PETITION IS FILED, IF THERE BE ONE, AND IF THERE BE NONE, IN A
NEWSPAPER WHICH, IN THE OPINION OF THE JUDGE, WILL BEST GIVE NOTICE TO THE
CREDITORS OF THE SAID INSOLVENT, AND IN THE NEWSPAPER SO DESIGNATED SAID
ORDER SHALL BE PUBLISHED 12 AS OFTEN AS MAY BE PRESCRIBED BY THE COURT OR
THE JUDGE THEREOF. THE TIME APPOINTED FOR THE ELECTION OF AN ASSIGNEE
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SHALL NOT BE LESS THAN TWO NOR MORE THAN EIGHT WEEKS FROM THE DATE OF
THE ORDER OF ADJUDICATION. UPON THE GRANTING OF SAID ORDER, ALL CIVIL
PROCEEDINGS PENDING AGAINST THE SAID INSOLVENT SHALL BE STAYED. WHEN AN
ASSIGNEE IS CHOSEN AS PROVIDED IN THIS ACT, THE SHERIFF OR RECEIVER, IF THERE
BE ONE, SHALL THEREUPON DELIVER TO SUCH ASSIGNEE ALL THE PROPERTY, ESTATE,
AND BELONGINGS OF THE INSOLVENT, WHICH HAVE COME INTO HIS POSSESSION, AND
HE SHALL BE ALLOWED AND PAID AS COMPENSATION FOR HIS SERVICES THE SAME
EXPENSES AND FEES AS WOULD BY LAW BE COLLECTIBLE IF THE PROPERTY HAD BEEN
LEVIED UPON AND SAFELY KEPT UNDER ATTACHMENT.
SECTION 25. PUBLICATION AND SERVICE OF ORDER. - A COPY OF THE ORDER PROVIDED
FOR IN THE LAST PRECEDING SECTION OF THIS ACT SHALL IMMEDIATELY BE
PUBLISHED BY THE CLERK OF SAID COURT IN THE NEWSPAPER DESIGNATED THEREIN
FOR THE NUMBER OF TIMES AND AS PRESCRIBED BY THE COURT OR THE JUDGE
THEREOF, AND UPON THE FILING, AT ANY TIME BEFORE THE DATE SET FOR SUCH
MEETING, OF THE SCHEDULE REQUIRED BY SAID LAST PRECEDING SECTION, A COPY OF
SAID ORDER SHALL BE DELIVERED PERSONALLY OR SENT BY THE CLERK FORTHWITH
BY REGISTERED MAIL, POSTAGE PREPAID, TO ALL CREDITORS NAMED IN SAID
SCHEDULE. IF SAID SCHEDULE IS NOT FILED PRIOR TO THE DAY FIXED FOR THE
ELECTION OF AN ASSIGNEE,

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PUBLICATION OF SAID ORDER AS HEREIN REQUIRED SHALL BE OF ITSELF SUFFICIENT
NOTICE TO THE CREDITORS OF THE TIME AND PLACE APPOINTED FOR THE ELECTION
OF AN ASSIGNEE. NO ORDER OF ADJUDICATION UPON CREDITOR'S PETITION SHALL BE
ENTERED UNLESS THERE BE FIRST DEPOSITED, IN ADDITION TO THE COST OF
COMMENCING SAID PROCEEDINGS, A SUM OF MONEY SUFFICIENT TO DEFRAY THE
EXPENSE OF THE PUBLICATION ORDERED BY THE COURT, NECESSARY POSTAGE, AND
TEN CENTAVOS FOR EACH COPY TO BE DELIVERED PERSONALLY OR MAILED TO THE
CREDITORS, WHICH LAST-NAMED SUM IS HEREBY CONSTITUTED THE LEGAL FEE OF
THE CLERK FOR THE PERSONAL DELIVERY OR MAILING REQUIRED BY THIS SECTION.
SECTION 26. ABSENTEE DEBTORS; SHERIFF TO TAKE POSSESSION. - IN ALL CASES WHERE
THE DEBTOR RESIDES OUT OF THE PHILIPPINE ISLANDS; OR HAS DEPARTED FROM THE
PHILIPPINE ISLANDS; OR CAN NOT, AFTER DUE DILIGENCE, BE FOUND WITHIN THE
PHILIPPINE ISLANDS; OR CONCEALS HIMSELF TO AVOID SERVICE OF THE ORDER TO
SHOW CAUSE, OR ANY OTHER PRELIMINARY PROCESS OR ORDERS IN THE MATTER; OR
IS A FOREIGN CORPORATION HAVING NO MANAGING OR BUSINESS AGENT, CASHIER, OR
SECRETARY WITHIN THE PHILIPPINE ISLANDS UPON WHOM SERVICE OR ORDERS AND
PROCESS CAN BE MADE, AND IT THEREFORE BECOMES NECESSARY TO OBTAIN SERVICE
OF PROCESS AND ORDER TO SHOW CAUSE, AS PROVIDED IN SECTION TWENTY-TWO OF
THIS ACT, THEN THE PETITIONING CREDITORS, UPON SUBMITTING THE AFFIDAVITS
REQUISITE TO PROCURE AN ORDER OF PUBLICATION, AND PRESENTING A BOND IN
DOUBLE THE AMOUNT OF THE AGGREGATE SUM OF THEIR CLAIMS AGAINST THE
DEBTOR, SHALL BE ENTITLED TO AN ORDER OF THE COURT DIRECTING THE SHERIFF OF
THE PROVINCE OR CITY IN WHICH THE MATTER IS PENDING TO TAKE INTO HIS
CUSTODY A SUFFICIENT AMOUNT OF PROPERTY OF THE DEBTOR TO SATISFY THE
DEMANDS OF THE PETITIONING CREDITORS AND THE COSTS OF THE PROCEEDINGS.
UPON RECEIVING SUCH ORDER OF THE COURT TO TAKE INTO CUSTODY PROPERTY OF
THE DEBTOR, IT SHALL BE THE DUTY OF THE SHERIFF TO TAKE POSSESSION OF THE
PROPERTY AND EFFECTS OF THE DEBTOR, NOT EXEMPT FROM EXECUTION, 13 TO AN
EXTENT SUFFICIENT TO COVER THE AMOUNT PROVIDED FOR, AND TO PREPARE,
WITHIN THREE DAYS FROM THE TIME OF TAKING SUCH POSSESSION, A COMPLETE
INVENTORY OF ALL THE PROPERTY SO TAKEN, AND TO RETURN IT TO THE COURT AS
SOON AS COMPLETED. THE TIME FOR TAKING THE INVENTORY AND MAKING RETURN
THEREOF MAY BE EXTENDED FOR GOOD CAUSE SHOWN TO THE COURT OR A JUDGE
THEREOF. THE SHERIFF SHALL ALSO PREPARE A SCHEDULE OF THE NAMES AND
RESIDENCES OF THE CREDITORS, AND THE AMOUNT DUE EACH, FROM THE BOOKS OF
THE DEBTOR, OR FROM SUCH OTHER PAPERS OR DATA OF THE DEBTOR AVAILABLE AS
MAY COME TO HIS POSSESSION, AND SHALL FILE SUCH SCHEDULE LIST OF CREDITORS
AND INVENTORY WITH THE CLERK OF THE COURT.
SECTION 27. ALL PROPERTY TAKEN TO BE HELD FOR ALL CREDITORS; APPEAL BONDS;
EXCEPTIONS TO SURETIES.- IN ALL CASES WHERE PROPERTY IS TAKEN INTO CUSTODY
BY THE SHERIFF, AS PROVIDED IN THE PRECEDING SECTION, IF IT DOES NOT EMBRACE
ALL THE PROPERTY AND EFFECTS OF THE DEBTOR NOT EXEMPT FROM EXECUTION,
ANY OTHER CREDITOR OR CREDITORS OF THE DEBTOR, UPON GIVING BOND TO BE
APPROVED BY THE COURT IN DOUBLE THE AMOUNT OF THEIR CLAIMS, SINGLY OR
JOINTLY, SHALL BE ENTITLED TO SIMILAR ORDERS, AND TO LIKE ACTION, BY THE
SHERIFF, UNTIL ALL CLAIMS BE PROVIDED FOR, IF THERE BE SUFFICIENT PROPERTY OR
11
EFFECTS. ALL PROPERTY TAKEN INTO CUSTODY BY THE SHERIFF BY VIRTUE OF THE
GIVING OF ANY SUCH BONDS SHALL BE HELD BY HIM FOR THE BENEFIT OF ALL
CREDITORS OF THE DEBTOR WHOSE CLAIMS SHALL BE DULY PROVED, AND AS
PROVIDED, IN THIS ACT. THE BONDS PROVIDED FOR IN THIS AND THE PRECEDING
SECTION TO PROCURE THE ORDER FOR CUSTODY OF THE PROPERTY AND EFFECTS OF
THE DEBTOR, SHALL BE CONDITIONED THAT IF, UPON FINAL HEARING OF THE
PETITION IN INSOLVENCY, THE COURT SHALL FIND IN FAVOR OF THE PETITIONERS,
SUCH BONDS AND ALL OF THEM SHALL BE VOID; IF THE DECISION BE IN FAVOR OF THE
DEBTOR, THE PROCEEDINGS SHALL BE DISMISSED, AND THE DEBTOR, HIS HEIRS,
ADMINISTRATORS, EXECUTORS, OR ASSIGNS, SHALL BE ENTITLED TO RECOVER SUCH
SUM OF MONEY AS SHALL BE SUFFICIENT TO COVER THE DAMAGES SUSTAINED BY HIM,
NOT TO EXCEED THE AMOUNT OF THE RESPECTIVE BONDS. SUCH DAMAGES SHALL BE
FIXED AND ALLOWED BY THE COURT. IF EITHER THE PETITIONERS OR THE DEBTOR
SHALL APPEAL FROM THE DECISION OF THE COURT, UPON FINAL HEARING OF THE
PETITION THE APPELLANT SHALL BE REQUIRED TO GIVE BOND TO THE SUCCESSFUL
PARTY IN A SUM DOUBLE THE AMOUNT OF THE VALUE OF THE PROPERTY IN
CONTROVERSY, AND FOR THE COSTS OF THE PROCEEDINGS. SUCH BOND SHALL BE
APPROVED BY THE COURT.

12
ANY PERSON INTERESTED IN THE ESTATE MAY EXCEPT TO THE SUFFICIENCY OF THE
SURETIES ON SUCH BOND OR BONDS. WHEN EXCEPTED TO, THE PETITIONER'S
SURETIES, UPON NOTICE TO THE PERSON EXCEPTING OF NOT LESS THAN TWO NOR
MORE THAN FIVE DAYS, MUST JUSTIFY AS TO THEIR SUFFICIENCY; AND UPON FAILURE
TO JUSTIFY, OR IF OTHERS IN THEIR PLACE FAIL TO JUSTIFY AT THE TIME AND PLACE
APPOINTED, THE JUDGE SHALL ISSUE AN ORDER VACATING THE ORDER TO TAKE THE
PROPERTY OF THE DEBTOR INTO THE CUSTODY OF THE SHERIFF, OR DENYING THE
APPEAL, AS THE CASE MAY BE.
SECTION 28. SALE UNDER EXECUTION. - IF, IN ANY CASE, PROPER AFFIDAVITS AND
BONDS ARE PRESENTED TO THE COURT OR A JUDGE THEREOF, ASKING FOR AND
OBTAINING AN ORDER OF PUBLICATION AND AN ORDER FOR THE CUSTODY OF THE
PROPERTY OF THE DEBTOR, AS PROVIDED IN SECTIONS TWENTY-SIX AND TWENTY-
SEVEN OF THIS ACT, AND THEREAFTER THE PETITIONERS SHALL MAKE IT APPEAR
SATISFACTORILY TO THE COURT OR A JUDGE THEREOF THAT THE INTEREST OF THE
PARTIES TO THE PROCEEDINGS WILL BE SUBSERVED BY A SALE THEREOF, THE
COURT MAY ORDER SUCH PROPERTY TO BE SOLD IN THE SAME MANNER AS
PROPERTY IS SOLD UNDER EXECUTION, 15 THE PROCEEDS TO BE DEPOSITED IN THE
COURT TO ABIDE THE RESULT OF THE PROCEEDINGS.
LB ACT NO. 1956 CHAPTER IV SEC 20-28

13
MONEY, STOCK, OR ESTATE, REVERSION, OR EXPECTANCY, OR PROPERTY OF ANY KIND,
EXCEPT THAT SET FORTH IN SAID INVENTORY. I HAVE NO INSTANCE CREATED OR
ACKNOWLEDGED A DEBT FOR A GREATER SUM THAN I HONESTLY AND TRULY OWE. I
HAVE NOT, DIRECTLY OR INDIRECTLY, CONCEALED, FRAUDULENTLY SOLD, OR
OTHERWISE FRAUDULENTLY DISPOSED OF, ANY PART OF MY REAL OR PERSONAL
PROPERTY, ESTATE, EFFECTS, OR RIGHTS OF ACTION, AND I HAVE NOT IN ANY WAY
COMPOUNDED WITH ANY OF MY CREDITORS IN ORDER TO SECURE SUCH CREDITORS,
OR TO RECEIVE OR TO ACCEPT ANY PROFIT OR ADVANTAGE THEREFROM, OR TO
DEFRAUD OR DECEIVE IN ANY MANNER ANY CREDITOR TO WHOM I AM INDEBTED. SO
HELP ME GOD."
SECTION 18. ORDER OF COURT DECLARING PETITIONER INSOLVENT; PUBLICATION
NOTICE. - UPON RECEIVING AND FILING SAID PETITION, SCHEDULE, AND INVENTORY,
THE COURT, OR THE JUDGE THEREOF IN VACATION, SHALL MAKE AN ORDER DECLARING
THE PETITIONER INSOLVENT, AND DIRECTING THE SHERIFF OF THE PROVINCE OR CITY
IN WHICH THE PETITION IS FILED TO TAKE POSSESSION OF, AND SAFELY KEEP, UNTIL
THE APPOINTMENT OF A RECEIVER OR ASSIGNEE, ALL THE DEEDS, VOUCHERS, BOOKS
OF ACCOUNT, PAPERS, NOTES, BONDS, BILLS, AND SECURITIES OF THE DEBTOR, AND
ALL HIS REAL AND PERSONAL PROPERTY, ESTATE, AND EFFECTS, EXCEPT SUCH AS MAY
BE BY LAW EXEMPT FROM EXECUTION. 3 SAID ORDER SHALL FURTHER FORBID THE
PAYMENT TO THE DEBTOR OF ANY DEBTS DUE TO HIM AND THE DELIVERY TO THE
DEBTOR, OR TO ANY PERSON FOR HIM, AND THE TRANSFER OF ANY PROPERTY BY HIM,
AND SHALL FURTHER APPOINT A TIME AND PLACE FOR A MEETING OF THE CREDITORS
TO CHOOSE AN ASSIGNEE OF THE ESTATE. SAID ORDER SHALL DESIGNATE A
NEWSPAPER OF GENERAL CIRCULATION PUBLISHED IN THE PROVINCE OR CITY IN
WHICH THE PETITION IS FILED, IF THERE BE ONE, AND IF THERE BE NONE, IN A
NEWSPAPER WHICH, IN THE OPINION OF THE JUDGE, WILL BEST GIVE NOTICE TO THE
CREDITORS OF THE SAID INSOLVENT, AND IN THE NEWSPAPER SO DESIGNATED SAID
ORDER SHALL BE PUBLISHED 4 AS OFTEN AS MAY BE PRESCRIBED BY THE COURT OR
THE JUDGE THE TIME APPOINTED FOR THE ELECTION OF AN ASSIGNEE SHALL NOT BE
LESS THAN TWO, NOR MORE THAN EIGHT, WEEKS FROM THE DATE OF THE ORDER OF
ADJUDICATION. UPON THE GRANTING OF SAID ORDER ALL CIVIL PROCEEDINGS
PENDING AGAINST SAID INSOLVENT SHALL BE STAYED. WHEN A RECEIVER IS
APPOINTED, OR AN ASSIGNEE CHOSEN, AS PROVIDED IN THIS ACT, THE SHERIFF SHALL
THEREUPON DELIVER TO SUCH RECEIVER OR ASSIGNEE CHOSEN, AS PROVIDED IN THIS
ACT, THE SHERIFF SHALL THEREUPON DELIVER TO SUCH RECEIVER OR ASSIGNEE, AS
THE CASE MAY BE, ALL THE PROPERTY, ASSETS, AND BELONGINGS OF THE INSOLVENT
WHICH HAVE COME INTO HIS POSSESSION, AND HE SHALL BE ALLOWED AND PAID AS
COMPENSATION FOR HIS SERVICES THE SAME EXPENSES AND FEES AS WOULD BY LAW
BE COLLECTIBLE IF THE PROPERTY HAD BEEN LEVIED UPON AND SAFELY KEPT UNDER
ATTACHMENT.
SECTION 19. PUBLICATION OF ORDER. - A COPY OF SAID ORDER SHALL IMMEDIATELY
BE PUBLISHED BY THE CLERK OF SAID COURT, IN THE NEWSPAPER DESIGNATED
THEREIN, FOR THE NUMBER OF TIMES AND AS PRESCRIBED BY THE COURT OR THE
JUDGE THEREOF, AND A COPY OF SAID ORDER SHALL BE DELIVERED PERSONALLY
OR SENT BY THE CLERK FORTHWITH BY REGISTERED MAIL, POSTAGE PREPAID, TO

14
ALL CREDITORS NAMED IN THE SCHEDULE. THERE SHALL BE DEPOSITED, IN
ADDITION TO TWENTY-FOUR PESOS, WHICH SHALL BE RECEIVED BY THE CLERK ON
COMMENCING SUCH PROCEEDINGS, A SUM OF MONEY SUFFICIENT TO DEFRAY THE
EXPENSE OF THE PUBLICATION ORDERED BY THE COURT, NECESSARY POSTAGE,
AND TEN CENTAVOS FOR EACH COPY, TO BE DELIVERED PERSONALLY OR MAILED
TO THE CREDITORS, WHICH LAST-NAMED SUM IS HEREBY CONSTITUTED THE LEGAL
FEE OF THE CLERK FOR THE PERSONAL DELIVERY OR MAILING REQUIRED BY THIS
SECTION.

CORPORATE REHABILITATION

1. DEFINITION OF TERMS

LAD SECTION 4. DEFINITION OF TERMS. - AS USED IN THIS ACT, THE TERM:


(A) ADMINISTRATIVE EXPENSES SHALL REFER TO THOSE REASONABLE AND NECESSARY
EXPENSES:
(1) INCURRED OR ARISING FROM THE FILING OF A PETITION UNDER THE PROVISIONS
OF THIS
ACT;
(2) ARISING FROM, OR IN CONNECTION WITH, THE CONDUCT OF THE PROCEEDINGS
UNDER
THIS ACT, INCLUDING THOSE INCURRED FOR THE REHABILITATION OR LIQUIDATION OF
THE
DEBTOR;
(3) INCURRED IN THE ORDINARY COURSE OF BUSINESS OF THE DEBTOR AFTER THE
COMMENCEMENT DATE;
(4) FOR THE PAYMENT OF NEW OBLIGATIONS OBTAINED AFTER THE COMMENCEMENT
DATE
TO FINANCE THE REHABILITATION OF THE DEBTOR;
(5) INCURRED FOR THE FEES OF THE REHABILITATION RECEIVER OR LIQUIDATOR AND
OF THE
PROFESSIONALS ENGAGED BY THEM; AND
(6) THAT ARE OTHERWISE AUTHORIZED OR MANDATED UNDER THIS ACT OR SUCH
OTHER
EXPENSES AS MAY BE ALLOWED BY THE SUPREME COURT IN ITS RULES.
(B) AFFILIATE SHALL REFER TO A CORPORATION THAT DIRECTLY OR INDIRECTLY,
THROUGH ONE OR MORE
INTERMEDIARIES, IS CONTROLLED BY, OR IS UNDER THE COMMON CONTROL OF
ANOTHER
CORPORATION.
(C) CLAIM SHALL REFER TO ALL CLAIMS OR DEMANDS OF WHATEVER NATURE OR
CHARACTER AGAINST
THE DEBTOR OR ITS PROPERTY, WHETHER FOR MONEY OR OTHERWISE, LIQUIDATED
OR UNLIQUIDATED,

15
FIXED OR CONTINGENT, MATURED OR UNMATURED, DISPUTED OR UNDISPUTED,
INCLUDING, BUT NOT
LIMITED TO; (1) ALL CLAIMS OF THE GOVERNMENT, WHETHER NATIONAL OR LOCAL,
INCLUDING TAXES,
TARIFFS AND CUSTOMS DUTIES; AND (2) CLAIMS AGAINST DIRECTORS AND OFFICERS
OF THE DEBTOR
ARISING FROM ACTS DONE IN THE DISCHARGE OF THEIR FUNCTIONS FALLING WITHIN
THE SCOPE OF
THEIR AUTHORITY: PROVIDED, THAT, THIS INCLUSION DOES NOT PROHIBIT THE
CREDITORS OR THIRD
PARTIES FROM FILING CASES AGAINST THE DIRECTORS AND OFFICERS ACTING IN THEIR
PERSONAL
CAPACITIES.
(D) COMMENCEMENT DATE SHALL REFER TO THE DATE ON WHICH THE COURT ISSUES
THE
COMMENCEMENT ORDER, WHICH SHALL BE RETROACTIVE TO THE DATE OF FILING OF
THE PETITION
FOR VOLUNTARY OR INVOLUNTARY PROCEEDINGS.
(E) COMMENCEMENT ORDER SHALL REFER TO THE ORDER ISSUED BY THE COURT
UNDER SECTION 16
OF THIS ACT.
(F) CONTROL SHALL REFER TO THE POWER OF A PARENT CORPORATION TO DIRECT OR
GOVERN THE
FINANCIAL AND OPERATING POLICIES OF AN ENTERPRISE SO AS TO OBTAIN BENEFITS
FROM ITS
ACTIVITIES. CONTROL IS PRESUMED TO EXIST WHEN THE PARENT OWNS, DIRECTLY OR
INDIRECTLY
THROUGH SUBSIDIARIES OR AFFILIATES, MORE THAN ONE-HALF (1/2) OF THE VOTING
POWER OF AN
ENTERPRISE UNLESS, IN EXCEPTIONAL CIRCUMSTANCES, IT CAN CLEARLY BE
DEMONSTRATED THAT
SUCH OWNERSHIP DOES NOT CONSTITUTE CONTROL. CONTROL ALSO EXISTS EVEN
WHEN THE PARENT
OWNS ONE-HALF (1/2) OR LESS OF THE VOTING POWER OF AN ENTERPRISE WHEN
THERE IS POWER:
(1) OVER MORE THAN ONE-HALF (1/2) OF THE VOTING RIGHTS BY VIRTUE OF AN
AGREEMENT WITH INVESTORS;
(2) TO DIRECT OR GOVERN THE FINANCIAL AND OPERATING POLICIES OF THE
ENTERPRISE
UNDER A STATUTE OR AN AGREEMENT;
(3) TO APPOINT OR REMOVE THE MAJORITY OF THE MEMBERS OF THE BOARD OF
DIRECTORS
OR EQUIVALENT GOVERNING BODY; OR
(4) TO CAST THE MAJORITY VOTES AT MEETINGS OF THE BOARD OF DIRECTORS OR
EQUIVALENT GOVERNING BODY.

16
(G) COURT SHALL REFER TO THE COURT DESIGNATED BY THE SUPREME COURT TO
HEAR AND
DETERMINE, AT THE FIRST INSTANCE, THE CASES BROUGHT UNDER THIS ACT.
(H) CREDITOR SHALL REFER TO A NATURAL OR JURIDICAL PERSON WHICH HAS A CLAIM
AGAINST THE
DEBTOR THAT AROSE ON OR BEFORE THE COMMENCEMENT DATE.
(I) DATE OF LIQUIDATION SHALL REFER TO THE DATE ON WHICH THE COURT ISSUES
THE LIQUIDATION
ORDER.
(J) DAYS SHALL REFER TO CALENDAR DAYS UNLESS OTHERWISE SPECIFICALLY STATED
IN THIS ACT.
(K) DEBTOR SHALL REFER TO, UNLESS SPECIFICALLY EXCLUDED BY A PROVISION OF
THIS ACT, A SOLE
PROPRIETORSHIP DULY REGISTERED WITH THE DEPARTMENT OF TRADE AND
INDUSTRY (DTI), A
PARTNERSHIP DULY REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
(SEC), A
CORPORATION DULY ORGANIZED AND EXISTING UNDER PHILIPPINE LAWS, OR AN
INDIVIDUAL DEBTOR
WHO HAS BECOME INSOLVENT AS DEFINED HEREIN.
(L) ENCUMBERED PROPERTY SHALL REFER TO REAL OR PERSONAL PROPERTY OF THE
DEBTOR UPON
WHICH A LIEN ATTACHES.
(M) GENERAL UNSECURED CREDITOR SHALL REFER TO A CREDITOR WHOSE CLAIM OR A
PORTION
THEREOF ITS NEITHER SECURED, PREFERRED NOR SUBORDINATED UNDER THIS ACT.
(N) GROUP OF DEBTORS SHALL REFER TO AND CAN COVER ONLY: (1) CORPORATIONS
THAT ARE
FINANCIALLY RELATED TO ONE ANOTHER AS PARENT CORPORATIONS, SUBSIDIARIES
OR AFFILIATES; (2)
PARTNERSHIPS THAT ARE OWNED MORE THAN FIFTY PERCENT (50%) BY THE SAME
PERSON; AND (3)
SINGLE PROPRIETORSHIPS THAT ARE OWNED BY THE SAME PERSON. WHEN THE
PETITION COVERS A
GROUP OF DEBTORS, ALL REFERENCE UNDER THESE RULES TO DEBTOR SHALL INCLUDE
AND APPLY TO
THE GROUP OF DEBTORS.
(O) INDIVIDUAL DEBTOR SHALL REFER TO A NATURAL PERSON WHO IS A RESIDENT AND
CITIZEN OF THE
PHILIPPINES THAT HAS BECOME INSOLVENT AS DEFINED HEREIN.
(P) INSOLVENT SHALL REFER TO THE FINANCIAL CONDITION OF A DEBTOR THAT IS
GENERALLY UNABLE
TO PAY ITS OR HIS LIABILITIES AS THEY FALL DUE IN THE ORDINARY COURSE OF
BUSINESS OR HAS
LIABILITIES THAT ARE GREATER THAN ITS OR HIS ASSETS.

17
(Q) INSOLVENT DEBTOR'S ESTATE SHALL REFER TO THE ESTATE OF THE INSOLVENT
DEBTOR, WHICH
INCLUDES ALL THE PROPERTY AND ASSETS OF THE DEBTOR AS OF COMMENCEMENT
DATE, PLUS THE
PROPERTY AND ASSETS ACQUIRED BY THE REHABILITATION RECEIVER OR LIQUIDATOR
AFTER THAT DATE,
AS WELL AS ALL OTHER PROPERTY AND ASSETS IN WHICH THE DEBTOR HAS AN
OWNERSHIP INTEREST,
WHETHER OR NOT THESE PROPERTY AND ASSETS ARE IN THE DEBTOR'S POSSESSION
AS OF
COMMENCEMENT DATE: PROVIDED, THAT TRUST ASSETS AND BAILMENT, AND OTHER
PROPERTY AND
ASSETS OF A THIRD PARTY THAT ARE IN THE POSSESSION OF THE DEBTOR AS OF
COMMENCEMENT
DATE, ARE EXCLUDED THEREFROM.
(R) INVOLUNTARY PROCEEDINGS SHALL REFER TO PROCEEDINGS INITIATED BY
CREDITORS.
(S) LIABILITIES SHALL REFER TO MONETARY CLAIMS AGAINST THE DEBTOR, INCLUDING
STOCKHOLDER'S ADVANCES THAT HAVE BEEN RECORDED IN THE DEBTOR'S AUDITED
FINANCIAL
STATEMENTS AS ADVANCES FOR FUTURE SUBSCRIPTIONS.
(T) LIEN SHALL REFER TO A STATUTORY OR CONTRACTUAL CLAIM OR JUDICIAL CHARGE
ON REAL OR
PERSONAL PROPERTY THAT LEGALITY ENTITIES A CREDITOR TO RESORT TO SAID
PROPERTY FOR PAYMENT
OF THE CLAIM OR DEBT SECURED BY SUCH LIEN.
(U) LIQUIDATION SHALL REFER TO THE PROCEEDINGS UNDER CHAPTER V OF THIS ACT.
(V) LIQUIDATION ORDER SHALL REFER TO THE ORDER ISSUED BY THE COURT UNDER
SECTION 112 OF
THIS ACT.
(W) LIQUIDATOR SHALL REFER TO THE NATURAL PERSON OR JURIDICAL ENTITY
APPOINTED AS SUCH BY
THE COURT AND ENTRUSTED WITH SUCH POWERS AND DUTIES AS SET FORTH IN THIS
ACT: PROVIDED,
THAT, IF THE LIQUIDATOR IS A JURIDICAL ENTITY, IT MUST DESIGNATED A NATURAL
PERSON WHO
POSSESSES ALL THE QUALIFICATIONS AND NONE OF THE DISQUALIFICATIONS AS ITS
REPRESENTATIVE,
IT BEING UNDERSTOOD THAT THE JURIDICAL ENTITY AND THE REPRESENTATIVE ARE
SOLIDARITY LIABLE
FOR ALL OBLIGATIONS AND RESPONSIBILITIES OF THE LIQUIDATOR.
(X) OFFICER SHALL REFER TO A NATURAL PERSON HOLDING A MANAGEMENT POSITION
DESCRIBED IN
OR CONTEMPLATED BY A JURIDICAL ENTITY'S ARTICLES OF INCORPORATION, BYLAWS
OR EQUIVALENT

18
DOCUMENTS, EXCEPT FOR THE CORPORATE SECRETARY, THE ASSISTANT CORPORATE
SECRETARY AND
THE EXTERNAL AUDITOR.
(Y) ORDINARY COURSE OF BUSINESS SHALL REFER TO TRANSACTIONS IN THE PURSUIT
OF THE
INDIVIDUAL DEBTOR'S OR DEBTOR'S BUSINESS OPERATIONS PRIOR TO
REHABILITATION OR INSOLVENCY
PROCEEDINGS AND ON ORDINARY BUSINESS TERMS.
(Z) OWNERSHIP INTEREST SHALL REFER TO THE OWNERSHIP INTEREST OF THIRD
PARTIES IN PROPERTY
HELD BY THE DEBTOR, INCLUDING THOSE COVERED BY TRUST RECEIPTS OR
ASSIGNMENTS OF
RECEIVABLES.
(AA) PARENT SHALL REFER TO A CORPORATION WHICH HAS CONTROL OVER ANOTHER
CORPORATION
EITHER DIRECTLY OR INDIRECTLY THROUGH ONE OR MORE INTERMEDIARIES.
(BB) PARTY TO THE PROCEEDINGS SHALL REFER TO THE DEBTOR, A CREDITOR, THE
UNSECURED
CREDITORS' COMMITTEE, A STAKEHOLDER, A PARTY WITH AN OWNERSHIP INTEREST
IN PROPERTY
HELD BY THE DEBTOR, A SECURED CREDITOR, THE REHABILITATION RECEIVER,
LIQUIDATOR OR ANY
OTHER JURIDICAL OR NATURAL PERSON WHO STANDS TO BE BENEFITED OR INJURED
BY THE OUTCOME
OF THE PROCEEDINGS AND WHOSE NOTICE OF APPEARANCE IS ACCEPTED BY THE
COURT.
(CC) POSSESSORY LIEN SHALL REFER TO A LIEN ON PROPERTY, THE POSSESSION OF
WHICH HAS BEEN
TRANSFERRED TO A CREDITOR OR A REPRESENTATIVE OR AGENT THEREOF.
(DD) PROCEEDINGS SHALL REFER TO JUDICIAL PROCEEDINGS COMMENCED BY THE
COURT'S
ACCEPTANCE OF A PETITION FILED UNDER THIS ACT.
(EE) PROPERTY OF OTHERS SHALL REFER TO PROPERTY HELD BY THE DEBTOR IN
WHICH OTHER
PERSONS HAVE AN OWNERSHIP INTEREST.
(FF) PUBLICATION NOTICE SHALL REFER TO NOTICE THROUGH PUBLICATION IN A
NEWSPAPER OF
GENERAL CIRCULATION IN THE PHILIPPINES ON A BUSINESS DAY FOR TWO (2)
CONSECUTIVE WEEKS.
(GG) REHABILITATION SHALL REFER TO THE RESTORATION OF THE DEBTOR TO A
CONDITION OF
SUCCESSFUL OPERATION AND SOLVENCY, IF IT IS SHOWN THAT ITS CONTINUANCE OF
OPERATION IS
ECONOMICALLY FEASIBLE AND ITS CREDITORS CAN RECOVER BY WAY OF THE PRESENT
VALUE OF

19
PAYMENTS PROJECTED IN THE PLAN, MORE IF THE DEBTOR CONTINUES AS A GOING
CONCERN THAN IF
IT IS IMMEDIATELY LIQUIDATED.
(HH) REHABILITATION RECEIVER SHALL REFER TO THE PERSON OR PERSONS, NATURAL
OR JURIDICAL,
APPOINTED AS SUCH BY THE COURT PURSUANT TO THIS ACT AND WHICH SHALL BE
ENTRUSTED WITH
SUCH POWERS AND DUTIES AS SET FORTH HEREIN.
(II) REHABILITATION PLAN SHALL REFER TO A PLAN BY WHICH THE FINANCIAL WELL-
BEING AND
VIABILITY OF AN INSOLVENT DEBTOR CAN BE RESTORED USING VARIOUS MEANS
INCLUDING, BUT NOT
LIMITED TO, DEBT FORGIVENESS, DEBT RESCHEDULING, REORGANIZATION OR QUASI-
REORGANIZATION,
DACION EN PAGO, DEBT-EQUITY CONVERSION AND SALE OF THE BUSINESS (OR PARTS
OF IT) AS A
GOING CONCERN, OR SETTING-UP OF NEW BUSINESS ENTITY AS PRESCRIBED IN
SECTION 62 HEREOF,
OR OTHER SIMILAR ARRANGEMENTS AS MAY BE APPROVED BY THE COURT OR
CREDITORS.
(JJ) SECURED CLAIM SHALL REFER TO A CLAIM THAT IS SECURED BY A LIEN.
(KK) SECURED CREDITOR SHALL REFER TO A CREDITOR WITH A SECURED CLAIM.
(LL) SECURED PARTY SHALL REFER TO A SECURED CREDITOR OR THE AGENT OR
REPRESENTATIVE OF
SUCH SECURED CREDITOR.
(MM) SECURITIES MARKET PARTICIPANT SHALL REFER TO A BROKER DEALER,
UNDERWRITER, TRANSFER
AGENT OR OTHER JURIDICAL PERSONS TRANSACTING SECURITIES IN THE CAPITAL
MARKET.
(NN) STAKEHOLDER SHALL REFER, IN ADDITION TO A HOLDER OF SHARES OF A
CORPORATION, TO A
MEMBER OF A NONSTOCK CORPORATION OR ASSOCIATION OR A PARTNER IN A
PARTNERSHIP.
(OO) SUBSIDIARY SHALL REFER TO A CORPORATION MORE THAN FIFTY PERCENT (50%)
OF THE VOTING
STOCK OF WHICH IS OWNED OR CONTROLLED DIRECTLY OR INDIRECTLY THROUGH ONE
OR MORE
INTERMEDIARIES BY ANOTHER CORPORATION, WHICH THEREBY BECOMES ITS PARENT
CORPORATION.
(PP) UNSECURED CLAIM SHALL REFER TO A CLAIM THAT IS NOT SECURED BY A LIEN.
(QQ) UNSECURED CREDITOR SHALL REFER TO A CREDITOR WITH AN UNSECURED CLAIM.
(RR) VOLUNTARY PROCEEDINGS SHALL REFER TO PROCEEDINGS INITIATED BY THE
DEBTOR.
(SS) VOTING CREDITOR SHALL REFER TO A CREDITOR THAT IS A MEMBER OF A CLASS OF
CREDITORS, THE

20
CONSENT OF WHICH IS NECESSARY FOR THE APPROVAL OF A REHABILITATION
PLAN UNDER THIS ACT.

LB RA 10142 SEC 4

2. STAY ORDER

LAD SECTION 60.NO DIMINUTION OF SECURED CREDITOR RIGHTS. THE ISSUANCE OF THE
COMMENCEMENT
ORDER AND THE SUSPENSION OR STAY ORDER, AND ANY OTHER PROVISION OF THIS
ACT, SHALL NOT BE
DEEMED IN ANY WAY TO DIMINISH OR IMPAIR THE SECURITY OR LIEN OF A SECURED
CREDITOR, OR THE
VALUE OF HIS LIEN OR SECURITY, EXCEPT THAT HIS RIGHT TO ENFORCE SAID SECURITY
OR LIEN MAY BE
SUSPENDED DURING THE TERM OF THE STAY ORDER.
THE COURT, UPON MOTION OR RECOMMENDATION OF THE REHABILITATION RECEIVER,
MAY ALLOW A
SECURED CREDITOR TO ENFORCE HIS SECURITY OR LIEN, OR FORECLOSE UPON
PROPERTY OF THE DEBTOR
SECURING HIS/ITS CLAIM, IF THE SAID PROPERTY IS NOT NECESSARY FOR THE
REHABILITATION OF THE DEBTOR.
THE SECURED CREDITOR AND/OR THE OTHER LIEN HOLDERS SHALL BE ADMITTED TO
THE REHABILITATION
PROCEEDINGS ONLY FOR THE BALANCE OF HIS CLAIM, IF ANY.

LB RA 10142 CHAPTER II (H) SEC 60

3. RECEIVER

LAD (C) THE REHABILITATION RECEIVER, MANAGEMENT COMMITTEE AND


CREDITORS' COMMITTEE.
SECTION 28.WHO MAY SERVE AS A REHABILITATION RECEIVER. - ANY QUALIFIED
NATURAL OR JURIDICAL
PERSON MAY SERVE AS A REHABILITATION RECEIVER: PROVIDED, THAT IF THE
REHABILITATION RECEIVER IS A
JURIDICAL ENTITY, IT MUST DESIGNATE A NATURAL PERSON/S WHO POSSESS/ES ALL
THE QUALIFICATIONS AND
NONE OF THE DISQUALIFICATIONS AS ITS REPRESENTATIVE, IT BEING UNDERSTOOD
THAT THE JURIDICAL ENTITY
AND THE REPRESENTATIVE/S ARE SOLIDARILY LIABLE FOR ALL OBLIGATIONS AND
RESPONSIBILITIES OF THE
REHABILITATION RECEIVER.
SECTION 29.QUALIFICATIONS OF A REHABILITATION RECEIVER. - THE REHABILITATION
RECEIVER SHALL
HAVE THE FOLLOWING MINIMUM QUALIFICATIONS:

21
(A)A CITIZEN OF THE PHILIPPINES OR A RESIDENT OF THE PHILIPPINES IN THE SIX (6)
MONTHS
IMMEDIATELY PRECEDING HIS NOMINATION;
(B)OF GOOD MORAL CHARACTER AND WITH ACKNOWLEDGED INTEGRITY,
IMPARTIALITY AND
INDEPENDENCE;
(C)HAS THE REQUISITE KNOWLEDGE OF INSOLVENCY AND OTHER RELEVANT
COMMERCIAL LAWS,
RULES AND PROCEDURES, AS WELL AS THE RELEVANT TRAINING AND/OR EXPERIENCE
THAT MAY BE
NECESSARY TO ENABLE HIM TO PROPERLY DISCHARGE THE DUTIES AND OBLIGATIONS
OF A
REHABILITATION RECEIVER; AND
(D)HAS NO CONFLICT OF INTEREST: PROVIDED, THAT SUCH CONFLICT OF INTEREST
MAY BE WAIVED,
EXPRESSLY OR IMPLIEDLY, BY A PARTY WHO MAY BE PREJUDICED THEREBY.
OTHER QUALIFICATIONS AND DISQUALIFICATIONS OF THE REHABILITATION RECEIVER
SHALL BE SET FORTH IN
PROCEDURAL RULES, TAKING INTO CONSIDERATION THE NATURE OF THE BUSINESS OF
THE DEBTOR AND THE
NEED TO PROTECT THE INTEREST OF ALL STAKEHOLDERS CONCERNED.
SECTION 30.INITIAL APPOINTMENT OF THE REHABILITATION RECEIVER. - THE COURT
SHALL INITIALLY
APPOINT THE REHABILITATION RECEIVER, WHO MAYOR MAY NOT BE FROM AMONG
THE NOMINEES OF THE
PETITIONER, HOWEVER, AT THE INITIAL HEARING OF THE PETITION, THE CREDITORS
AND THE DEBTOR WHO ARE
NOT PETITIONERS MAY NOMINATE OTHER PERSONS TO THE POSITION. THE COURT
MAY RETAIN THE
REHABILITATION RECEIVER INITIALLY APPOINTED OR APPOINT ANOTHER WHO
MAYOR MAY NOT BE FROM
AMONG THOSE NOMINATED.
IN CASE THE DEBTOR IS A SECURITIES MARKET PARTICIPANT, THE COURT SHALL GIVE
PRIORITY TO THE
NOMINEE OF THE APPROPRIATE SECURITIES OR INVESTOR PROTECTION FUND.
IF A QUALIFIED NATURAL PERSON OR ENTITY IS NOMINATED BY MORE THAN FIFTY
PERCENT (50%) OF THE
SECURED CREDITORS AND THE GENERAL UNSECURED CREDITORS, AND SATISFACTORY
EVIDENCE IS SUBMITTED,
THE COURT SHALL APPOINT THE CREDITORS' NOMINEE AS REHABILITATION RECEIVER.
SECTION 31.POWERS, DUTIES AND RESPONSIBILITIES OF THE REHABILITATION
RECEIVER. - THE
REHABILITATION RECEIVER SHALL BE DEEMED AN OFFICER OF THE COURT WITH THE
PRINCIPAL DUTY OF
PRESERVING AND MAXIMIZING THE VALUE OF THE ASSETS OF THE DEBTOR DURING
THE REHABILITATION
22
PROCEEDINGS, DETERMINING THE VIABILITY OF THE REHABILITATION OF THE
DEBTOR, PREPARING AND
RECOMMENDING A REHABILITATION PLAN TO THE COURT, AND IMPLEMENTING THE
APPROVED
REHABILITATION PLAN, TO THIS END, AND WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, THE
REHABILITATION RECEIVER SHALL HAVE THE FOLLOWING POWERS, DUTIES AND
RESPONSIBILITIES:
(A)TO VERIFY THE ACCURACY OF THE FACTUAL ALLEGATIONS IN THE PETITION AND
ITS ANNEXES;
(B)TO VERIFY AND CORRECT, IF NECESSARY, THE INVENTORY OF ALL OF THE ASSETS OF
THE DEBTOR,
AND THEIR VALUATION;
(C)TO VERIFY AND CORRECT, IF NECESSARY, THE SCHEDULE OF DEBTS AND LIABILITIES
OF THE
DEBTOR;
(D)TO EVALUATE THE VALIDITY, GENUINENESS AND TRUE AMOUNT OF ALL THE
CLAIMS AGAINST THE
DEBTOR;
(E)TO TAKE POSSESSION, CUSTODY AND CONTROL, AND TO PRESERVE THE VALUE OF
ALL THE
PROPERTY OF THE DEBTOR;
(F)TO SUE AND RECOVER, WITH THE APPROVAL OF THE COURT, ALL AMOUNTS OWED
TO, AND ALL
PROPERTIES PERTAINING TO THE DEBTOR;
(G)TO HAVE ACCESS TO ALL INFORMATION NECESSARY, PROPER OR RELEVANT TO THE
OPERATIONS
AND BUSINESS OF THE DEBTOR AND FOR ITS REHABILITATION;
(H) TO SUE AND RECOVER, WITH THE. APPROVAL OF THE COURT, ALL PROPERTY OR
MONEY OF THE
DEBTOR PAID, TRANSFERRED OR DISBURSED IN FRAUD OF THE DEBTOR OR ITS
CREDITORS, OR WHICH
CONSTITUTE UNDUE PREFERENCE OF CREDITOR/S;
(I) TO MONITOR THE OPERATIONS AND THE BUSINESS OF THE DEBTOR TO ENSURE
THAT NO
PAYMENTS OR TRANSFERS OF PROPERTY ARE MADE OTHER THAN IN THE ORDINARY
COURSE OF
BUSINESS;
(J) WITH THE COURT'S APPROVAL, TO ENGAGE THE SERVICES OF OR TO EMPLOY
PERSONS OR ENTITIES
TO ASSIST HIM IN THE DISCHARGE OF HIS FUNCTIONS;
(K) TO DETERMINE THE MANNER BY WHICH THE DEBTOR MAY BE BEST
REHABILITATED, TO REVIEW)
REVISE AND/OR RECOMMEND ACTION ON THE REHABILITATION PLAN AND SUBMIT
THE SAME OR A
NEW ONE TO THE COURT FOR APPROVAL;
23
(1) TO IMPLEMENT THE REHABILITATION PLAN AS APPROVED BY THE COURT, IF 80
PROVIDED
UNDER THE REHABILITATION PLAN;
(M) TO ASSUME AND EXERCISE THE POWERS OF MANAGEMENT OF THE DEBTOR, IF
DIRECTED BY
THE COURT PURSUANT TO SECTION 36 HEREOF;
(N) TO EXERCISE SUCH OTHER POWERS AS MAY, FROM TIME TO TIME, BE CONFERRED
UPON HIM
BY THE COURT; AND
TO SUBMIT A STATUS REPORT ON THE REHABILITATION PROCEEDINGS EVERY
QUARTER OR AS MAY BE
REQUIRED BY THE COURT MOTU PROPRIO. OR UPON MOTION OF ANY CREDITOR. OR AS
MAY BE
PROVIDED, IN THE REHABILITATION PLAN.
UNLESS APPOINTED BY THE COURT, PURSUANT TO SECTION 36 HEREOF, THE
REHABILITATION
RECEIVER SHALL NOT TAKE OVER THE MANAGEMENT AND CONTROL OF THE DEBTOR
BUT MAY
RECOMMEND THE APPOINTMENT OF A MANAGEMENT COMMITTEE OVER THE DEBTOR
IN THE CASES
PROVIDED BY THIS ACT.
SECTION 32.REMOVAL OF THE REHABILITATION RECEIVER. THE REHABILITATION
RECEIVER MAY BE
REMOVED AT ANY TIME BY THE COURT EITHER MOTU PROPRIO OR UPON MOTION BY
ANY CREDITOR/S
HOLDING MORE THAN FIFTY PERCENT (50%) OF THE TOTAL OBLIGATIONS OF THE
DEBTOR, ON SUCH GROUNDS
AS THE RULES OF PROCEDURE MAY PROVIDE WHICH SHALL INCLUDE, BUT ARE NOT
LIMITED TO, THE
FOLLOWING:
(A) INCOMPETENCE, GROSS NEGLIGENCE, FAILURE TO PERFORM OR FAILURE TO
EXERCISE THE PROPER
DEGREE OF CARE IN THE PERFORMANCE OF HIS DUTIES AND POWERS;
(B) LACK OF A PARTICULAR OR SPECIALIZED COMPETENCY REQUIRED BY THE SPECIFIC
CASE;
(C) ILLEGAL ACTS OR CONDUCT IN THE PERFORMANCE OF HIS DUTIES AND POWERS;
(D) LACK OF QUALIFICATION OR PRESENCE OF ANY DISQUALIFICATION;
(E) CONFLICT OF INTEREST THAT ARISES AFTER HIS APPOINTMENT; AND
(F) MANIFEST LACK OF INDEPENDENCE THAT IS DETRIMENTAL TO THE GENERAL BODY
OF THE
STAKEHOLDERS.
SECTION 33.COMPENSATION AND TERMS OF SERVICE. THE REHABILITATION RECEIVER
AND HIS DIRECT
EMPLOYEES OR INDEPENDENT CONTRACTORS SHALL BE ENTITLED TO COMPENSATION
FOR REASONABLE FEES

24
AND EXPENSES FROM THE DEBTOR ACCORDING TO THE TERMS APPROVED BY THE
COURT AFTER NOTICE AND
HEARING. PRIOR TO SUCH HEARING, THE REHABILITATION RECEIVER AND HIS DIRECT
EMPLOYEES SHALL BE
ENTITLED TO REASONABLE COMPENSATION BASED ON QUANTUM MERUIT. SUCH COSTS
SHALL BE CONSIDERED
ADMINISTRATIVE EXPENSES.
SECTION 34.OATH AND BOND OF THE REHABILITATION RECEIVER. PRIOR TO ENTERING
UPON HIS POWERS,
DUTIES AND RESPONSIBILITIES, THE REHABILITATION RECEIVER SHALL TAKE AN OATH
AND FILE A BOND, IN
SUCH AMOUNT TO BE FIXED BY THE COURT, CONDITIONED UPON THE FAITHFUL AND
PROPER DISCHARGE OF
HIS POWERS, DUTIES AND RESPONSIBILITIES.
SECTION 35.VACANCY. - INCASE THE POSITION OF REHABILITATION RECEIVER IS
VACATED FOR ANY REASON
WHATSOEVER. THE COURT SHALL DIRECT THE DEBTOR AND THE CREDITORS TO
SUBMIT THE NAME/S OF THEIR
NOMINEE/S TO THE POSITION. THE COURT MAY APPOINT ANY OF THE QUALIFIED
NOMINEES. OR ANY OTHER
PERSON QUALIFIED FOR THE POSITION.
SECTION 36.DISPLACEMENT OF EXISTING MANAGEMENT BY THE REHABILITATION
RECEIVER OR
MANAGEMENT COMMITTEE. UPON MOTION OF ANY INTERESTED PARTY, THE COURT
MAY APPOINT AND
DIRECT THE REHABILITATION RECEIVER TO ASSUME THE POWERS OF MANAGEMENT
OF THE DEBTOR, OR
APPOINT A MANAGEMENT COMMITTEE THAT WILL UNDERTAKE THE MANAGEMENT OF
THE DEBTOR. UPON
CLEAR AND CONVINCING EVIDENCE OF ANY OF THE FOLLOWING CIRCUMSTANCES:
(A) ACTUAL OR IMMINENT DANGER OF DISSIPATION, LOSS, WASTAGE OR DESTRUCTION
OF THE
DEBTORS ASSETS OR OTHER PROPERTIES;
(B) PARALYZATION OF THE BUSINESS OPERATIONS OF THE DEBTOR; OR
(C) GROSS MISMANAGEMENT OF THE DEBTOR. OR FRAUD OR OTHER WRONGFUL
CONDUCT ON THE
PART OF, OR GROSS OR WILLFUL VIOLATION OF THIS ACT BY. EXISTING MANAGEMENT
OF THE DEBTOR
OR THE OWNER, PARTNER, DIRECTOR, OFFICER OR REPRESENTATIVE/S IN
MANAGEMENT OF THE
DEBTOR.
IN CASE THE COURT APPOINTS THE REHABILITATION RECEIVER TO ASSUME THE
POWERS OF MANAGEMENT OF
THE DEBTOR. THE COURT MAY:
(1) REQUIRE THE REHABILITATION RECEIVER TO POST AN ADDITIONAL BOND;

25
(2) AUTHORIZE HIM TO ENGAGE THE SERVICES OR TO EMPLOY PERSONA OR ENTITIES
TO ASSIST HIM
IN THE DISCHARGE OF HIS MANAGERIAL FUNCTIONS; AND
(3) AUTHORIZE A COMMENSURATE INCREASE IN HIS COMPENSATION.

LB RA 10142 CHAPTER II(C) SEC 28-36

4. REHABILITATION PLAN

LAD (II) REHABILITATION PLAN SHALL REFER TO A PLAN BY WHICH THE FINANCIAL
WELL-BEING AND
VIABILITY OF AN INSOLVENT DEBTOR CAN BE RESTORED USING VARIOUS MEANS
INCLUDING, BUT NOT
LIMITED TO, DEBT FORGIVENESS, DEBT RESCHEDULING, REORGANIZATION OR QUASI-
REORGANIZATION,
DACION EN PAGO, DEBT-EQUITY CONVERSION AND SALE OF THE BUSINESS (OR PARTS
OF IT) AS A
GOING CONCERN, OR SETTING-UP OF NEW BUSINESS ENTITY AS PRESCRIBED IN
SECTION 62 HEREOF,
OR OTHER SIMILAR ARRANGEMENTS AS MAY BE APPROVED BY THE COURT OR
CREDITORS.

LB RA 10142 SEC 4 (II)

26
5. CONTENTS OF PETITION AND OTHER TYPES OF REHABILITATION

LAD

27
LB AM NO. 12-12-11 RULE 2 SEC 2

28
SECURITIES REGULATION CODE- RA 8799

1. KINDS OF SECURITIES

LAD SECTION 3. DEFINITION OF TERMS. - 3.1. "SECURITIES" ARE SHARES,


PARTICIPATION OR
INTERESTS IN A CORPORATION OR IN A COMMERCIAL ENTERPRISE OR PROFIT-MAKING
VENTURE AND EVIDENCED BY A CERTIFICATE, CONTRACT, INSTRUMENTS, WHETHER
WRITTEN
OR ELECTRONIC IN CHARACTER. IT INCLUDES:
(A) SHARES OF STOCKS, BONDS, DEBENTURES, NOTES EVIDENCES OF
INDEBTEDNESS, ASSET-BACKED SECURITIES;
(B) INVESTMENT CONTRACTS, CERTIFICATES OF INTEREST OR PARTICIPATION IN A
PROFIT
SHARING AGREEMENT, CERTIFIES OF DEPOSIT FOR A FUTURE SUBSCRIPTION;
(C) FRACTIONAL UNDIVIDED INTERESTS IN OIL, GAS OR OTHER MINERAL RIGHTS;
(D) DERIVATIVES LIKE OPTION AND WARRANTS;
(E) CERTIFICATES OF ASSIGNMENTS, CERTIFICATES OF PARTICIPATION, TRUST
CERTIFICATES, VOTING TRUST CERTIFICATES OR SIMILAR INSTRUMENTS
(F) PROPRIETARY OR NONPROPRIETARY MEMBERSHIP CERTIFICATES IN
CORPORATIONS;
AND
(G) OTHER INSTRUMENTS AS MAY IN THE FUTURE BE DETERMINED BY THE
COMMISSION.
3.2. "ISSUER" IS THE ORIGINATOR, MAKER, OBLIGOR, OR CREATOR OF THE SECURITY.
3.3. "BROKER" IS A PERSON ENGAGED IN THE BUSINESS OF BUYING AND SELLING
SECURITIES FOR THE ACCOUNT OF OTHERS.
3.4. "DEALER" MEANS MANY PERSON WHO BUYS SELLS SECURITIES FOR HIS/HER OWN
ACCOUNT IN THE ORDINARY COURSE OF BUSINESS.
3.5. "ASSOCIATED PERSON OF A BROKER OR DEALER" IS AN EMPLOYEE THEREFOR
WHOM,
DIRECTLY EXERCISES CONTROL OF SUPERVISORY AUTHORITY, BUT DOES NOT INCLUDE
A
SALESMAN, OR AN AGENT OR A PERSON WHOSE FUNCTIONS ARE SOLELY CLERICAL OR
MINISTERIAL.
3.6. "CLEARING AGENCY" IS ANY PERSON WHO ACTS AS INTERMEDIARY IN MAKING
DELIVERIES UPON PAYMENT EFFECT SETTLEMENT IN SECURITIES TRANSACTIONS.
3.7. "EXCHANGE" IS AN ORGANIZED MARKET PLACE OR FACILITY THAT BRINGS
TOGETHER
BUYERS AND SELLERS AND EXECUTES TRADE OF SECURITIES AND/OR COMMODITIES.
3.8. "INSIDER" MEANS (A) THE ISSUER; (B) A DIRECTOR OR OFFICER (OR ANY PERSON
PERFORMING SIMILAR FUNCTIONS) OF, OR A PERSON CONTROLLING THE ISSUER; GIVES
OR
GAVE HIM ACCESS TO MATERIAL INFORMATION ABOUT THE ISSUER OR THE SECURITY
THAT IS

29
NOT GENERALLY AVAILABLE TO THE PUBLIC; (D) A GOVERNMENT EMPLOYEE,
DIRECTOR, OR
OFFICER OF AN EXCHANGE, CLEARING AGENCY AND/OR SELF-REGULATORY
ORGANIZATION
WHO HAS ACCESS TO MATERIAL INFORMATION ABOUT AN ISSUER OR A SECURITY THAT
IS
NOT GENERALLY AVAILABLE TO THE PUBLIC; OR (E) A PERSON WHO LEARNS SUCH
INFORMATION BY A COMMUNICATION FROM ANY FORGOING INSIDERS.
3.9. "PRE-NEED PLANS" ARE CONTRACTS WHICH PROVIDE FOR THE PERFORMANCE OF
FUTURE SERVICES OF OR THE PAYMENT OF FUTURE MONETARY CONSIDERATIONS AT
THE TIME
ACTUAL NEED, FOR WHICH PLAN HOLDERS PAY IN CASH OR INSTALLMENT AT STATED
PRICES,
WITH OR WITHOUT INTEREST OR INSURANCE COVERAGE AND INCLUDES LIFE, PENSION,
EDUCATION, INTERMENT, AND OTHER PLANS WHICH THE COMMISSION MAY FROM
TIME TO
TIME APPROVE.
3.10. "PROMOTER" IS A PERSON WHO, ACTING ALONE OR WITH OTHERS, TAKES
INITIATIVE
IN FOUNDING AND ORGANIZING THE BUSINESS OR ENTERPRISE OF THE ISSUER AND
RECEIVES CONSIDERATION THEREFOR.
3.11. "PROSPECTUS" IS THE DOCUMENT MADE BY OR AN BEHALF OF AN ISSUER,
UNDERWRITER OR DEALER TO SELL OR OFFER SECURITIES FOR SALE TO THE PUBLIC
THROUGH
REGISTRATION STATEMENT FILED WITH THE COMMISSION.
3.12. "REGISTRATION STATEMENT" IS THE APPLICATION FOR THE REGISTRATION OF
SECURITIES REQUIRED TO BE FILED WITH THE COMMISSION.
3.13. "SALESMAN" IS A NATURAL PERSON, EMPLOYED AS SUCH AS AN AGENT, BY A
DEALER, ISSUER OR BROKER TO BUY AND SELL SECURITIES.
3.14. "UNCERTIFICATED SECURITY" IS A SECURITY EVIDENCED BY ELECTRONIC OR
SIMILAR
RECORDS.
3.15. "UNDERWRITER" IS A PERSON WHO GUARANTEES ON A FIRM COMMITMENT
AND/OR
DECLARED BEST EFFORT BASIS THE DISTRIBUTION AND SALE OF SECURITIES OF ANY
KIND BY
ANOTHER COMPANY.

LB RA 8799 SEC 3

2. PROTECTION OF INVESTORS

SECTION 19. TENDER OFFERS. ANY PERSON OR GROUP OF PERSONS ACTING IN


CONCERT WHO INTENDS TO ACQUIRE AT LEAST 15% OF ANY CLASS OF ANY EQUITY
SECURITY

30
OF A LISTED CORPORATION OF ANY CLASS OF ANY EQUITY SECURITY OF A
CORPORATION WITH
ASSETS OF AT LEAST FIFTY MILLION PESOS (50,000,000.00) AND HAVING TWO
HUNDRED(200) OR MORE STOCKHOLDERS AT LEAST ONE HUNDRED SHARES EACH OR
WHO
INTENDS TO ACQUIRE AT LEAST THIRTY PERCENT(30%) OF SUCH EQUITY OVER A
PERIOD OF
TWELVE MONTHS(12) SHALL MAKE A TENDER OFFER TO STOCKHOLDERS BY FILLING
WITH THE
COMMISSION A DECLARATION TO THAT EFFECT; AND FURNISH THE ISSUER, A
STATEMENT
CONTAINING SUCH OF THE INFORMATION REQUIRED IN SECTION 17 OF THIS CODE AS
THE
COMMISSION MAY PRESCRIBE. SUCH PERSON OR GROUP OF PERSONS SHALL PUBLISH
ALL
REQUEST OR INVITATIONS OR TENDER OFFER OR REQUESTING SUCH TENDER OFFERS
SUBSEQUENT TO THE INITIAL SOLICITATION OR REQUEST SHALL CONTAIN SUCH
INFORMATION
AS THE COMMISSION MAY PRESCRIBE, AND SHALL BE FILED WITH THE COMMISSION
AND
SENT TO THE ISSUER NOT ALTER THAN THE TIME COPIES OF SUCH MATERIALS ARE
FIRST
PUBLISHED OR SENT OR GIVEN TO SECURITY HOLDERS.
(A) ANY SOLICITATION OR RECOMMENDATION TO THE HOLDERS OF SUCH A SECURITY
TO ACCEPT OR REJECT A TENDER OFFER OR REQUEST OR INVITATION FOR TENDERS
SHALL
BE MADE IN ACCORDANCE WITH SUCH RULES AND REGULATIONS AS MAY BE
PRESCRIBE.
(B) SECURITIES DEPOSITED PURSUANT TO A TENDER OFFER OR REQUEST OR
INVITATION FOR TENDERS MAY BE WITHDRAWN BY OR ON BEHALF OF THE DEPOSITOR
AT ANY TIME THROUGHOUT THE PERIOD THAT TENDER OFFER REMAINS OPEN AND IF
THE SECURITIES DEPOSITED HAVE NOT BEEN PREVIOUSLY ACCEPTED FOR
PAYMENT, AND AT ANY TIME AFTER SIXTY (60) DAYS FROM THE DATE OF THE
ORIGINAL TENDER OFFER TO REQUEST OR INVITATION, EXCEPT AS THE COMMISSION
MAY OTHERWISE PRESCRIBE.
(C) WHERE THE SECURITIES OFFERED EXCEED THAT WHICH PERSON OR GROUP OF
PERSONS IS BOUND OR WILLING TO TAKE UP AND PAY FOR, THE SECURITIES THAT ARE
SUBJECT OF THE TENDER OFFERS SHALL BE TAKEN UP US NEARLY AS MAY BE PRO
DATA, DISREGARDING FRACTIONS, ACCORDING TO THE NUMBER OF SECURITIES
DEPOSITED TO EACH DEPOSITOR. THE PROVISION OF THIS SUBJECT SHALL ALSO
APPLY TO SECURITIES DEPOSITED WITHIN TEN (10) DAYS AFTER NOTICE OF INCREASE
IN THE CONSIDERATION OFFERED TO SECURITY HOLDERS, AS DESCRIBED IN
PARAGRAPH (E) OF THIS SUBSECTION, IS FIRST PUBLISHED OR SENT OR GIVEN TO
SECURITY HOLDERS.
(D) WHERE ANY PERSON VARIES THE TERMS OF A TENDER OFFER OR REQUEST OR
INVITATION FOR TENDERS BEFORE THE EXPIRATION THEREOF BY INCREASING THE
31
CONSIDERATION OFFERED TO HOLDERS OF SUCH SECURITIES, SUCH PERSON SHALL
PAY THE INCREASED CONSIDERATION TO EACH SECURITY HOLDER WHOSE
SECURITIES ARE TAKEN UP AND PAID FOR WHETHER OR NOT SUCH SECURITIES HAVE
BEEN TAKEN UP BY SUCH PERSON BEFORE THE VARIATION OF THE TENDER OFFER OR
REQUEST OR INVITATION.
19.2. IT SHALL BE LAWFUL FOR ANY PERSON TO MAKE ANY UNTRUE STATEMENT OF A
MATERIAL FACT OR OMIT TO STATE ANY MATERIAL FACT NECESSARY IN ORDER TO
MAKE THE
STATEMENTS MADE IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY ARE
MADE,
NOT MIS-LEADING, OR TO ENGAGED TO ANY FRAUDULENT, DECEPTIVE OR
MANIPULATIVE
ACTS OR PRACTICES, IN CONNECTION WITH ANY TENDER OFFER OR REQUEST OR
INVITATION
FOR TENDERS, OR ANY SOLICITATION FOR ANY SECURITY HOLDERS IN OPPOSITION TO
OR IN
FAVOR OF ANY SUCH FAVOR OF ANY SUCH OFFER, REQUEST, OR INVITATION. THE
COMMISSION SHALL, FOR THE PURPOSES OF THIS SUBSECTION, DEFINE AND PRESCRIBE
MEANS REASONABLY DESIGNED TO PREVENT, SUCH ACTS AND PRACTICES AS ARE
FRAUDULENT, DECEPTIVE AND MANIPULATIVE.
SECTION 20. PROXY SOLICITATIONS. - 20.1. PROXIES MUST BE ISSUED AND PROXY
SOLICITATION MUST BE MADE IN ACCORDANCE WITH RULES AND REGULATIONS TO BE
ISSUED BY THE COMMISSION;
20.2. PROXIES MUST BE IN WRITING, SIGNED BY THE STOCKHOLDER OR HIS DULY
AUTHORIZED REPRESENTATIVE AND FILE BEFORE THE SCHEDULED MEETING WITH
THE
CORPORATE SECRETARY.
20.3. UNLESS OTHERWISE PROVIDED IN THE PROXY, IT SHALL BE VALID ONLY FOR THE
MEETING FOR WHICH IT IS INTENDED. NO PROXY SHALL BE VALID ONLY FOR THE
METING FOR
WHICH IT IS INTENDED. NO PROXY SHALL BE VALID AND EFFECTIVE FOR A PERIOD
LONGER
THAN FIVE (5) YEARS AT ONE TIME.
20.4. NO BROKER OR DEALER SHALL GIVE ANY PROXY, CONSENT OR ANY
AUTHORIZATION, IN
RESPECT OF ANY SECURITY CARRIED FOR THE ACCOUNT OF THE CUSTOMER, TO A
PERSON
OTHER THAN THE CUSTOMER, WITHOUT WRITTEN AUTHORIZATION OF SUCH
CUSTOMER.
20.5. A BROKER OR DEALER WHO HOLDS OR ACQUIRE THE PROXY FOR AT LEAST TEN
PERCENT
(10%) OR SUCH PERCENTAGE AS THE COMMISSION MAY PRESCRIBE OF THE
OUTSTANDING SHARE OF SUCH ISSUER, SHALL SUBMIT A REPORT IDENTIFYING THE
BENEFICIAL OWNER OF TEN DAYS AFTER SUCH ACQUISITION, FOR ITS OWN ACCOUNT
OR
CUSTOMER, TO THE ISSUER OF SECURITY, TO THE EXCHANGE WHERE THE SECURITY IS
32
TRADED AND TO THE COMMISSION.
SECTION 21. FEES OF TENDER OFFERS AND CERTAIN PROXY SOLICITATIONS. AT THE
TIME OF FILLING WITH THE COMMISSION OF ANY STATEMENT REQUIRED UNDER
SECTION 19
FOR ANY TENDER OFFER OR SECTION 72.2 FOR ISSUER PURCHASES, OR SECTION 20 FOR
PROXY OR CONSENT SOLICITATION, THE COMMISSION MAY REQUIRE THAT THE PERSON
MAKING SUCH FILING PAY A FEE OF NOT MORE THAN ONE-TENTH (1/10)(1%) OF;
21.1. THE PROPOSE AGGREGATE PURCHASE PRICE IN THE CASE OF A TRANSACTION
UNDER SECTION 20 OR 72.2; OR
21.2. THE PROPOSED PAYMENT IN CASH, AND ION VALUE OF ANY SECURITIES OR
PROPERTY TO BE TRANSFERRED IN THE ACQUISITION, MERGER OR CONSOLIDATING, OR
THE
CASH AND VALUE OF ANY SECURITIES PROPOSED TO BE RECEIVED UPON THE SALE
DISPOSITION OF SUCH ASSETS IN THE CASE OF A SOLICITATION UNDER SECTION 20.
THE
COMMISSION SHALL PRESCRIBE BY RULE DIMINISHING FEES IN INVERSE PROPORTION
TO
THE VALUE OF THE AGGREGATE PRICE OF THE OFFERING.
SECTION 22. INTERNAL RECORD KEEPING AND ACCOUNTING CONTROL. - EVERY ISSUER
WHICH HAS A CLASS OF SECURITIES THAT SATISFIES THE REQUIREMENTS OF
SUBSECTION
17.2 SHALL:
22.1. DEVICE AND MAINTAIN A SYSTEM OF INTERNAL ACCOUNTING CONTROLS
SUFFICIENT
TO PROVIDE REASONABLE ASSURANCE THAT: (A) TRANSACTIONS AND ACCESS TO
ASSETS
ARE PURSUANT TO MANAGEMENT AUTHORIZATION; (B) FINANCIAL STATEMENTS ARE
PROVIDED IN CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
THAT ARE
ADOPTED BY THE ACCOUNTING STANDARDS COUNCIL AND THE RULES PROMULGATED
BY
THE COMMISSION WITH THE REGARD TO THE PREPARATION OF THE FINANCIAL
STATEMENTS;
AND (C) RECORDED ASSETS ARE COMPARED WITH EXISTING ASSETS AT REASONABLE
INTERVALS AND DIFFERENCES ARE RECONCILED.
SECTION 23. TRANSACTIONS OF DIRECTORS OFFICERS AND PRINCIPAL STOCKHOLDERS.
23.1. EVERY PERSON WHO IS DIRECTLY OR INDIRECTLY THE BENEFICIAL OWNER OF
MORE
THAN TEN PER CENTUM (10%) OF ANY CLASS OF ANY EQUITY SECURITY WHICH
SATISFIES
THE REQUIREMENTS OF SUBSECTION 17.2, OR WHO IS A DIRECTOR OR AN OFFICER OF
THE
ISSUER OF SUCH SECURITY, SHALL FILE, AT THE TIME EITHER SUCH REQUIREMENT IS
FIRST
SATISFIED OR AFTER TEN DAYS AFTER HE BECOMES SUCH A BENEFICIAL OWNER,
DIRECTOR,
33
OR OFFICER, A STATEMENT FORM THE COMMISSION AND, IF SUCH SECURITY IS LISTED
FOR
TRADING ON AN EXCHANGE, ALSO WITH THE EXCHANGE OF THE AMOUNT OF ALL THE
EQUITY
SECURITY OF SUCH ISSUER OF WHICH HE IS THE BENEFICIAL OWNER, AND WITHIN TEN
DAYS
AFTER THE CLOSE OF EACH CALENDAR MONTH THEREAFTER, IF THERE HAS BEEN A
CHANGE
IN SUCH OWNERSHIP AT THE CLOSE OF THE CALENDAR MONTH AND SUCH CHANGES IN
HIS
OWNERSHIP AS HAVE OCCURRED DURING SUCH CALENDAR MONTH.
23.2. FOR THE PURPOSE OF PREVENTING THE UNFAIR USE OF INFORMATION WHICH
MAY
HAVE BEEN OBTAINED BY SUCH BENEFICIAL OWNER, DIRECTOR OR OFFICER BY
REASON OF
HIS RELATIONSHIP TO THE ISSUER, ANY PROFIT REALIZED BY HIM FROM ANY
PURCHASE OR
SALE, OR ANY SALE OR PURCHASE, OF ANY EQUITY SECURITY OF SUCH ISSUER WITHIN
ANY
PERIOD OF LESS THAN (6) MONTHS UNLESS SUCH SECURITY WAS ACQUIRED IN GOOD
FAITH
IN CONNECTION WITH A DEBT PREVIOUSLY CONTRACTED, SHALL INURE TO AND BE
RECOVERABLE BY THE ISSUER, IRRESPECTIVE OF ANY INTENTION OF HOLDING THE
SECURITY
PURCHASED OR OF NOT REPURCHASING THE SECURITY SOLD FOR A PERIOD EXCEEDING
SIX
(6) MONTHS. SUIT TO RECOVER SUCH PROFIT MAY BE INSTITUTED BEFORE THE
REGIONAL
TRIAL COURT BY THE ISSUER, OR BY THE OWNER OF ANY SECURITY OF THE ISSUER IN
THE
NAME AND IN BEHALF OF THE ISSUER IF THE ISSUER SHALL FAIL OR REFUSE TO BRING
SUCH
SUIT WITHIN SIXTY (60) DAYS AFTER REQUEST OR SHALL FAIL DILIGENTLY TO
PROSECUTE THE
SAME THEREAFTER, BUT NOT SUCH SHALL BE BROUGHT MORE THAN TWO YEARS
AFTER THE
DATE SUCH PROFIT WAS REALIZED. THIS SUBSECTION SHALL NOT BE CONSTRUED TO
COVER
ANY TRANSACTION WERE SUCH BENEFICIAL OWNER WAS NOT SUCH BOTH TIME OF
THE
OWNER OR THE SALE, OR THE SALE OF PURCHASE, OF THE SECURITY INVOLVED, OR
ANY
TRANSACTION OR TRANSACTIONS WHICH THE COMMISSION BY RULES AND
REGULATIONS
MAY EXEMPT AS NOT COMPREHENDED WITHIN THE PURPOSE OF THIS SUBSECTION.

34
23.3. IT SHALL BE UNLAWFUL FOR ANY SUCH BENEFICIAL OWNER, DIRECTOR OR
OFFICER,
DIRECTLY OR INDIRECTLY, TO SELL ANY EQUITY SECURITY OF SUCH ISSUER IF THE
PERSON
SELLING THE PRINCIPAL: (A) DOES NOT OWN THE SECURITY SOLD: OR (B) IF OWNING
THE
SECURITY, DOES NOT DELIVER NOT DELIVER IT AGAINST SUCH SALE WITHIN 20 DAYS
THEREAFTER, OR DOES NOT WITHIN FIVE DAYS AFTER SUCH SALE DEPOSIT IN THE
MAILS OR
THE UNUSUAL CHANNELS OF TRANSPORTATION; BUT NO PERSON SHALL BE DEEMED
TO
HAVE VIOLATED THIS SUBSECTION IF HE PROVES NOT WITHSTANDING THE EXERCISE
OF
GOOD FAITH HE WAS UNABLE TO MAKE SUCH DELIVERY IN SUCH TIME, OR THAT TO DO
SO
WOULD CAUSE UNDUE INCONVENIENCE OR EXPENSE.
23.4. THE PROVISIONS OF SUBSECTION 23.2 SHALL NOT APPLY TO ANY PURCHASE AND
SALE, OR SALE AND PURCHASE, AND THE PROVISIONS OF SUBSECTION 23.3 SHALL NOT
APPLY TO ANY SALE, OF AN EQUITY SECURITY NOT THEN OR THEREAFTER HELD BY HIM
AND
AN INVESTMENT ACCOUNT, BY A DEALER IN THE ORDINARY COURSE OF HIS BUSINESS
AND
INCIDENT TO THE ESTABLISHMENT OR MAINTENANCE BY HIM OF A PRIMARY OR
SECONDARY MARKET, OTHERWISE THAN ON AN EXCHANGE, FOR SUCH SECURITY. THE
COMMISSION MAY, BY SUCH RULES AND REGULATIONS AS IT DEEMS NECESSARY OR
APPROPRIATE IN THE PUBLIC INTEREST, DEFINE AND PRESCRIBE TERMS AND
CONDITIONS
WITH RESPECT TO SECURITIES HELD IN AN INVESTMENT ACCOUNT AND
TRANSACTIONS
MADE IN THE ORDINARY COURSE OF BUSINESS AND INCIDENT TO THE ESTABLISHMENT
OR
MAINTENANCE OF A PRIMARY OR SECONDARY MARKET.

LB RA NO. 8799 CHAPTER VI SEC 19-23

3. PRIVATE TENDER OFFER

LAD SECTION 19. TENDER OFFERS. ANY PERSON OR GROUP OF PERSONS ACTING IN
CONCERT WHO INTENDS TO ACQUIRE AT LEAST 15% OF ANY CLASS OF ANY EQUITY
SECURITY
OF A LISTED CORPORATION OF ANY CLASS OF ANY EQUITY SECURITY OF A
CORPORATION WITH
ASSETS OF AT LEAST FIFTY MILLION PESOS (50,000,000.00) AND HAVING TWO
HUNDRED(200) OR MORE STOCKHOLDERS AT LEAST ONE HUNDRED SHARES EACH OR
WHO

35
INTENDS TO ACQUIRE AT LEAST THIRTY PERCENT(30%) OF SUCH EQUITY OVER A
PERIOD OF
TWELVE MONTHS(12) SHALL MAKE A TENDER OFFER TO STOCKHOLDERS BY FILLING
WITH THE
COMMISSION A DECLARATION TO THAT EFFECT; AND FURNISH THE ISSUER, A
STATEMENT
CONTAINING SUCH OF THE INFORMATION REQUIRED IN SECTION 17 OF THIS CODE AS
THE
COMMISSION MAY PRESCRIBE. SUCH PERSON OR GROUP OF PERSONS SHALL PUBLISH
ALL
REQUEST OR INVITATIONS OR TENDER OFFER OR REQUESTING SUCH TENDER OFFERS
SUBSEQUENT TO THE INITIAL SOLICITATION OR REQUEST SHALL CONTAIN SUCH
INFORMATION
AS THE COMMISSION MAY PRESCRIBE, AND SHALL BE FILED WITH THE COMMISSION
AND
SENT TO THE ISSUER NOT ALTER THAN THE TIME COPIES OF SUCH MATERIALS ARE
FIRST
PUBLISHED OR SENT OR GIVEN TO SECURITY HOLDERS.
(A) ANY SOLICITATION OR RECOMMENDATION TO THE HOLDERS OF SUCH A SECURITY
TO ACCEPT OR REJECT A TENDER OFFER OR REQUEST OR INVITATION FOR TENDERS
SHALL
BE MADE IN ACCORDANCE WITH SUCH RULES AND REGULATIONS AS MAY BE
PRESCRIBE.
(B) SECURITIES DEPOSITED PURSUANT TO A TENDER OFFER OR REQUEST OR
INVITATION FOR TENDERS MAY BE WITHDRAWN BY OR ON BEHALF OF THE DEPOSITOR
AT ANY TIME THROUGHOUT THE PERIOD THAT TENDER OFFER REMAINS OPEN AND IF
THE SECURITIES DEPOSITED HAVE NOT BEEN PREVIOUSLY ACCEPTED FOR
PAYMENT, AND AT ANY TIME AFTER SIXTY (60) DAYS FROM THE DATE OF THE
ORIGINAL TENDER OFFER TO REQUEST OR INVITATION, EXCEPT AS THE COMMISSION
MAY OTHERWISE PRESCRIBE.
(C) WHERE THE SECURITIES OFFERED EXCEED THAT WHICH PERSON OR GROUP OF
PERSONS IS BOUND OR WILLING TO TAKE UP AND PAY FOR, THE SECURITIES THAT ARE
SUBJECT OF THE TENDER OFFERS SHALL BE TAKEN UP US NEARLY AS MAY BE PRO
DATA, DISREGARDING FRACTIONS, ACCORDING TO THE NUMBER OF SECURITIES
DEPOSITED TO EACH DEPOSITOR. THE PROVISION OF THIS SUBJECT SHALL ALSO
APPLY TO SECURITIES DEPOSITED WITHIN TEN (10) DAYS AFTER NOTICE OF INCREASE
IN THE CONSIDERATION OFFERED TO SECURITY HOLDERS, AS DESCRIBED IN
PARAGRAPH (E) OF THIS SUBSECTION, IS FIRST PUBLISHED OR SENT OR GIVEN TO
SECURITY HOLDERS.
(D) WHERE ANY PERSON VARIES THE TERMS OF A TENDER OFFER OR REQUEST OR
INVITATION FOR TENDERS BEFORE THE EXPIRATION THEREOF BY INCREASING THE
CONSIDERATION OFFERED TO HOLDERS OF SUCH SECURITIES, SUCH PERSON SHALL
PAY THE INCREASED CONSIDERATION TO EACH SECURITY HOLDER WHOSE
SECURITIES ARE TAKEN UP AND PAID FOR WHETHER OR NOT SUCH SECURITIES HAVE
BEEN TAKEN UP BY SUCH PERSON BEFORE THE VARIATION OF THE TENDER OFFER OR
REQUEST OR INVITATION.
36
19.2. IT SHALL BE LAWFUL FOR ANY PERSON TO MAKE ANY UNTRUE STATEMENT OF A
MATERIAL FACT OR OMIT TO STATE ANY MATERIAL FACT NECESSARY IN ORDER TO
MAKE THE
STATEMENTS MADE IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY ARE
MADE,
NOT MIS-LEADING, OR TO ENGAGED TO ANY FRAUDULENT, DECEPTIVE OR
MANIPULATIVE
ACTS OR PRACTICES, IN CONNECTION WITH ANY TENDER OFFER OR REQUEST OR
INVITATION
FOR TENDERS, OR ANY SOLICITATION FOR ANY SECURITY HOLDERS IN OPPOSITION TO
OR IN
FAVOR OF ANY SUCH FAVOR OF ANY SUCH OFFER, REQUEST, OR INVITATION. THE
COMMISSION SHALL, FOR THE PURPOSES OF THIS SUBSECTION, DEFINE AND PRESCRIBE
MEANS REASONABLY DESIGNED TO PREVENT, SUCH ACTS AND PRACTICES AS ARE
FRAUDULENT, DECEPTIVE AND MANIPULATIVE.

LB RA NO. 8799 CHAPTER VI SEC 19

4. INSIDER TRADING

LAD SECTION 27. INSIDERS DUTY TO DISCLOSE WHEN TRADING. 27.1. IT SHALL BE
UNLAWFUL FOR AN INSIDER TO SELL OR BUY A SECURITY OF THE ISSUER, WHILE IN
POSSESSION OF MATERIAL INFORMATION WITH RESPECT TO THE ISSUER OR THE
SECURITY
THAT IS NOT GENERALLY AVAILABLE TO THE PUBLIC, UNLESS: (A) THE INSIDER PROVES
THAT
THE INFORMATION WAS NOT GAINED FROM SUCH RELATIONSHIP; OR (B) IF THE OTHER
PARTY
SELLING TO OR BUYING FROM THE INSIDER (OR HIS AGENT) IS IDENTIFIED, THE
INSIDER
PROVES: (I) THAT HE DISCLOSED THE INFORMATION TO THE OTHER PARTY, OR (II)
THAT HE
HAD REASON TO BELIEVE THAT THE OTHER PARTY OTHERWISE IS ALSO IN POSSESSION
OF
THE INFORMATION. A PURCHASE OR SALE OF A SECURITY OF THE ISSUER MADE BY AN
INSIDER DEFINED IN SUBSECTION 3.8, OR SUCH INSIDERS SPOUSE OR RELATIVES BY
AFFINITY OR CONSANGUINITY WITHIN THE SECOND DEGREE, LEGITIMATE OR
COMMON-LAW,
SHALL BE PRESUMED TO HAVE BEEN EFFECTED WHILE IN POSSESSION OF MATERIAL
NONPUBLIC INFORMATION IF TRANSACTED AFTER SUCH INFORMATION CAME INTO
EXISTENCE
BUT PRIOR TO DISSEMINATION OF SUCH INFORMATION TO THE PUBLIC AND THE LAPSE
OF A
REASONABLE TIME FOR MARKET TO ABSORB SUCH INFORMATION: PROVIDED,
HOWEVER,

37
THAT THIS PRESUMPTION SHALL BE REBUTTED UPON A SHOWING BY THE PURCHASER
OR
SELLER THAT HE WAS AWARE OF THE MATERIAL NONPUBLIC INFORMATION AT THE
TIME OF
THE PURCHASE OR SALE.
27.2. FOR PURPOSES OF THIS SECTION, INFORMATION IS "MATERIAL NONPUBLIC" IF: (A)
IT
HAS NOT BEEN GENERALLY DISCLOSED TO THE PUBLIC AND WOULD LIKELY AFFECT
THE
MARKET PRICE OF THE SECURITY AFTER BEING DISSEMINATED TO THE PUBLIC AND
THE
LAPSE OF A REASONABLE TIME FOR THE MARKET TO ABSORB THE INFORMATION; OR
(B)
WOULD BE CONSIDERED BY A REASONABLE PERSON IMPORTANT UNDER THE
CIRCUMSTANCES IN DETERMINING HIS COURSE OF ACTION WHETHER TO BUY, SELL OR
HOLD
A SECURITY.
27.3. IT SHALL BE UNLAWFUL FOR ANY INSIDER TO COMMUNICATE MATERIAL
NONPUBLIC
INFORMATION ABOUT THE ISSUER OR THE SECURITY TO ANY PERSON WHO, BY VIRTUE
OF THE
COMMUNICATION, BECOMES AN INSIDER AS DEFINED IN SUBSECTION 3.8, WHERE THE
INSIDER COMMUNICATING THE INFORMATION KNOWS OR HAS REASON TO BELIEVE
THAT
SUCH PERSON WILL LIKELY BUY OR SELL A SECURITY OF THE ISSUER WHOLE IN
POSSESSION
OF SUCH INFORMATION.
27.4. (A) IT SHALL BE UNLAWFUL WHERE A TENDER OFFER HAS COMMENCED OR IS
ABOUT
TO COMMENCE FOR:
(I) ANY PERSON (OTHER THAN THE TENDER OFFEROR) WHO IS IN POSSESSION OF
MATERIAL NONPUBLIC INFORMATION RELATING TO SUCH TENDER OFFER, TO BUY OR
SELL THE SECURITIES OF THE ISSUER THAT ARE SOUGHT OR TO BE SOUGHT BY SUCH
TENDER OFFER IF SUCH PERSON KNOWS OR HAS REASON TO BELIEVE THAT THE
INFORMATION IS NONPUBLIC AND HAS BEEN ACQUIRED DIRECTLY OR INDIRECTLY
FROM THE TENDER OFFEROR, THOSE ACTING ON ITS BEHALF, THE ISSUER OF THE
SECURITIES SOUGHT OR TO BE SOUGHT BY SUCH TENDER OFFER, OR ANY INSIDER OF
SUCH ISSUER; AND
(II) ANY TENDER OFFEROR, THOSE ACTING ON ITS BEHALF, THE ISSUER OF THE
SECURITIES SOUGHT OR TO BE SOUGHT BY SUCH TENDER OFFER, AND ANY INSIDER
OF SUCH ISSUER TO COMMUNICATE MATERIAL NONPUBLIC INFORMATION RELATING
TO
THE TENDER OFFER TO ANY OTHER PERSON WHERE SUCH COMMUNICATION IS LIKELY
TO RESULT IN A VIOLATION OF SUBSECTION 27.4 (A)(I).
(B) FOR PURPOSES OF THIS SUBSECTION THE TERM "SECURITIES OF THE ISSUER
SOUGHT OR
38
TO BE SOUGHT BY SUCH TENDER OFFER" SHALL INCLUDE ANY SECURITIES
CONVERTIBLE OR
EXCHANGEABLE INTO SUCH SECURITIES OR ANY OPTIONS OR RIGHTS IN ANY OF THE
FOREGOING SECURITIES.

LB RA NO. 8799 CHAPTER VII SEC 24

COOPERATIVE CODE- RA 6938 AS AMENDED BY RA 9520

1. ORGANIZATION AND REGISTRATION OF COOPERATIVES

LAD

UNCLAIMED BALANCES LAW-PD 679


LAD
SECTION 1. SECTIONS 1, 2, 3, 4, AND 5 OF ACT NO. 3936 ARE HEREBY AMENDED TO
READ AS FOLLOWS:
SEC. 1. UNCLAIMED BALANCES, WITHIN THE MEANING OF THIS ACT, SHALL INCLUDE
CREDITS OR DEPOSITS OF MONEY, BULLION, SECURITY OR OTHER EVIDENCE OF
INDEBTEDNESS OF ANY KIND, AND INTEREST THEREON WITH BANKS, BUILDINGS AND
LOAN ASSOCIATIONS, AND TRUST CORPORATIONS, AS HEREINAFTER DEFINED, IN
FAVOR OF ANY PERSON KNOWN TO BE DEAD OR WHO HAS NOT MADE FURTHER
DEPOSITS OR WITHDRAWALS DURING THE PRECEDING TEN YEARS OR MORE. SUCH
UNCLAIMED BALANCES, TOGETHER WITH THE INCREASE AND PROCEEDS THEREOF,
SHALL BE DEPOSITED WITH THE TREASURER OF THE PHILIPPINES TO THE CREDIT OF
THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES TO BE USED AS THE
NATIONAL ASSEMBLY MAY DIRECT.

39
BANKS, BUILDING AND LOAN ASSOCIATIONS AND TRUST CORPORATIONS, WITHIN
THE MEANING OF THIS ACT, SHALL REFER TO INSTITUTIONS DEFINED UNDER SECTION
TWO, THIRTY-NINE AND FIFTY-SIX, RESPECTIVELY, OF REPUBLIC ACT NUMBERED
THREE HUNDRED THIRTY SEVEN, OTHERWISE KNOWN AS THE GENERAL BANKING ACT,
AS AMENDED, WHETHER ORGANIZED UNDER SPECIAL CHARTERS OR NOT.
SEC. 2. IMMEDIATELY AFTER THE TAKING EFFECT OF THIS ACT AND WITHIN THE
MONTH OF JANUARY OF EVERY ODD YEAR, ALL BANKS, BUILDING AND LOAN
ASSOCIATIONS, AND TRUST CORPORATIONS SHALL FORWARD TO THE TREASURER OF
THE PHILIPPINES A STATEMENT, UNDER OATH, OF THEIR RESPECTIVE MANAGING
OFFICERS, OF ALL CREDITS AND DEPOSITS HELD BY THEM IN FAVOR OF PERSONS
KNOWN TO BE DEAD, OR WHO HAVE NOT MADE FURTHER DEPOSITS OR WITHDRAWALS
DURING THE PRECEDING TEN YEARS OR MORE, ARRANGED IN ALPHABETICAL ORDER
ACCORDING TO THE NAMES OF CREDITORS AND DEPOSITORS, AND SHOWING:
(A) THE NAMES AND LAST KNOWN PLACE OF RESIDENCE OR POST OFFICE ADDRESSES
OF THE PERSONS IN WHOSE FAVOR SUCH UNCLAIMED BALANCES STAND;

40
(B) THE AMOUNT AND THE DATE OF THE OUTSTANDING UNCLAIMED BALANCE AND
WHETHER THE SAME IS IN MONEY OR IN SECURITY, AND IF THE LATTER, THE NATURE
OF THE SAME;
(C) THE DATE WHEN THE PERSON IN WHOSE FAVOR THE UNCLAIMED BALANCE
STANDS DIED, IF KNOWN, OR THE DATE WHEN HE MADE HIS LAST DEPOSIT OR
WITHDRAWAL; AND
(D) THE INTEREST DUE ON SUCH UNCLAIMED BALANCE, IF ANY, AND THE AMOUNT
THEREOF.
A COPY OF THE ABOVE SWORN STATEMENT SHALL BE POSTED IN A CONSPICUOUS
PLACE IN THE PREMISES OF THE BANK, BUILDING AND LOAN ASSOCIATION, OR TRUST
CORPORATION CONCERNED FOR AT LEAST SIXTY DAYS FROM THE DATE OF FILING
THEREOF: PROVIDED, THAT IMMEDIATELY BEFORE FILING THE ABOVE SWORN
STATEMENT, THE BANK, BUILDING AND LOAN ASSOCIATION, AND TRUST CORPORATION
SHALL COMMUNICATE WITH THE PERSON IN WHOSE FAVOR THE UNCLAIMED BALANCE
STANDS AT HIS LAST KNOWN PLACE OF RESIDENCE OR POST OFFICE ADDRESS.
IT SHALL BE THE DUTY OF THE TREASURER OF THE PHILIPPINES TO INFORM THE
SOLICITOR GENERAL FROM TIME TO TIME THE EXISTENCE OF UNCLAIMED BALANCES
HELD BY BANKS, BUILDING AND LOAN ASSOCIATIONS, AND TRUST CORPORATIONS.
SEC. 3. WHENEVER THE SOLICITOR GENERAL SHALL BE INFORMED OF SUCH
UNCLAIMED BALANCES, HE SHALL COMMENCE AN ACTION OR ACTIONS IN THE NAME
OF THE PEOPLE OF THE REPUBLIC OF THE PHILIPPINES IN THE COURT OF FIRST
INSTANCE OF THE PROVINCE OR CITY WHERE THE BANK, BUILDING AND LOAN
ASSOCIATION OR TRUST CORPORATION IS LOCATED, IN WHICH SHALL BE JOINED AS
PARTIES THE BANK, BUILDING AND LOAN ASSOCIATION OR TRUST CORPORATION AND
ALL SUCH CREDITORS OR DEPOSITORS. ALL OR ANY OF SUCH CREDITORS OR
DEPOSITORS OR BANKS, BUILDING AND LOAN ASSOCIATION OR TRUST CORPORATIONS
MAY BE INCLUDED IN ONE ACTION. SERVICE OF PROCESS IN SUCH ACTION OR ACTIONS
SHALL BE MADE BY DELIVERY OF A COPY OF THE COMPLAINT AND SUMMONS TO THE
PRESIDENT, CASHIER, OR MANAGING OFFICER OF EACH DEFENDANT BANK, BUILDING
AND LOAN ASSOCIATION OR TRUST CORPORATION AND BY PUBLICATION OF A COPY OF
SUCH SUMMONS IN A NEWSPAPER OF GENERAL CIRCULATION, EITHER IN ENGLISH, IN
FILIPINO, OR IN A LOCAL DIALECT, PUBLISHED IN THE LOCALITY WHERE THE BANK,
BUILDING AND LOAN ASSOCIATION OR TRUST CORPORATION IS SITUATED, IF THERE BE
ANY, AND IN CASE THERE IS NONE, IN THE CITY OF MANILA, AT SUCH TIME AS THE
COURT MAY ORDER. UPON THE TRIAL, THE COURT MUST HEAR ALL PARTIES WHO HAVE
APPEARED THEREIN, AND IF IT BE DETERMINED THAT SUCH UNCLAIMED BALANCES IN
ANY DEFENDANT BANK, BUILDING AND LOAN ASSOCIATION OR TRUST CORPORATION
ARE UNCLAIMED AS HEREINBEFORE STATED, THEN THE COURT SHALL RENDER
JUDGMENT IN FAVOR OF THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES,
DECLARING THAT SAID UNCLAIMED BALANCES HAVE ESCHEATED TO THE
GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES AND COMMANDING SAID BANK,
BUILDING AND LOAN ASSOCIATION OR TRUST CORPORATION TO FORTHWITH DEPOSIT
THE SAME WITH THE TREASURER OF THE PHILIPPINES TO CREDIT OF THE
GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES TO BE USED AS THE NATIONAL
ASSEMBLY MAY DIRECT.

41
AT THE TIME OF ISSUING SUMMONS IN THE ACTION ABOVE PROVIDED FOR, THE CLERK
OF COURT SHALL ALSO ISSUE A NOTICE SIGNED BY HIM, GIVING THE TITLE AND
NUMBER OF SAID ACTION, AND REFERRING TO THE COMPLAINT THEREIN, AND
DIRECTED TO ALL PERSONS, OTHER THAN THOSE NAMED AS DEFENDANTS THEREIN,
CLAIMING ANY INTEREST IN ANY UNCLAIMED BALANCE MENTIONED IN SAID
COMPLAINT, AND REQUIRING THEM TO APPEAR WITHIN SIXTY DAYS AFTER THE
PUBLICATION OR FIRST PUBLICATION, IF THERE ARE SEVERAL, OF SUCH SUMMONS,
AND SHOW CAUSE, IF THEY HAVE ANY, WHY THE UNCLAIMED BALANCES INVOLVED IN
SAID ACTION SHOULD NOT BE DEPOSITED WITH THE TREASURER OF THE PHILIPPINES
AS IN THIS ACT PROVIDED AND NOTIFYING THEM THAT IF THEY DO NOT APPEAR AND
SHOW CAUSE, THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES WILL APPLY
TO THE COURT FOR THE RELIEF DEMANDED IN THE COMPLAINT. A COPY OF SAID
NOTICE SHALL BE ATTACHED TO, AND PUBLISHED WITH THE COPY OF, SAID SUMMONS
REQUIRED TO BE PUBLISHED AS ABOVE, AND AT THE END OF THE COPY OF SUCH
NOTICE SO PUBLISHED, THERE SHALL BE A STATEMENT OF THE DATE OF PUBLICATION,
OR FIRST PUBLICATION, IF THERE ARE SEVERAL, OF SAID SUMMONS AND NOTICE. ANY
PERSON INTERESTED MAY APPEAR IN SAID ACTION AND BECOME A PARTY THERETO.
UPON THE PUBLICATION OR THE COMPLETION OF THE PUBLICATION, IF THERE ARE
SEVERAL, OF THE SUMMONS AND NOTICE, AND THE SERVICE OF THE SUMMONS ON THE
DEFENDANT BANKS, BUILDING AND LOAN ASSOCIATIONS OR TRUST CORPORATIONS,
THE COURT SHALL HAVE FULL AND COMPLETE JURISDICTION IN THE REPUBLIC OF THE
PHILIPPINES OVER THE SAID UNCLAIMED BALANCES AND OVER THE PERSONS HAVING
OR CLAIMING ANY INTEREST IN THE SAID UNCLAIMED BALANCES, OR ANY OF THEM,
AND SHALL HAVE FULL AND COMPLETE JURISDICTION TO HEAR AND DETERMINE THE
ISSUES HEREIN, AND RENDER THE APPROPRIATE JUDGMENT THEREON.
SEC. 4. IF THE PRESIDENT, CASHIER OR MANAGING OFFICER OF THE BANK, BUILDING
AND LOAN ASSOCIATION, OR TRUST CORPORATION NEGLECTS OR REFUSES TO MAKE
AND FILE THE SWORN STATEMENT REQUIRED BY THIS ACTION, SUCH BANK, BUILDING
AND LOAN ASSOCIATION, OR TRUST CORPORATION SHALL PAY TO THE GOVERNMENT
THE SUM OF FIVE HUNDRED PESOS A MONTH FOR EACH MONTH OR FRACTION
THEREOF DURING WHICH SUCH DEFAULT SHALL CONTINUE.
SEC. 5. ANY BANK, BUILDING AND LOAN ASSOCIATION OR TRUST CORPORATION WHICH
SHALL MAKE ANY DEPOSIT WITH THE TREASURER OF THE PHILIPPINES IN
CONFORMITY WITH THE PROVISIONS OF THIS ACT SHALL NOT THEREAFTER BE LIABLE
TO ANY PERSON FOR THE SAME AND ANY ACTION WHICH MAY BE BROUGHT BY ANY
PERSON AGAINST IN ANY BANK, BUILDING AND LOAN ASSOCIATION, OR TRUST
CORPORATION FOR UNCLAIMED BALANCES SO DEPOSITED WITH THE TREASURER OF
THE PHILIPPINES SHALL BE DEFENDED BY THE SOLICITOR GENERAL WITHOUT COST TO
SUCH BANK, BUILDING AND LOAN ASSOCIATION OR TRUST CORPORATION.
SECTION 2. THIS DECREE SHALL TAKE EFFECT IMMEDIATELY.
DONE IN THE CITY OF MANILA, THIS 2ND DAY OF APRIL, IN THE YEAR OF OUR LORD,
NINETEEN HUNDRED AND SEVENTY-FIVE.

LB PD 679, S. 1975

42
GENERAL BANKING LAW RA 8791
1. DEFINITION OF BANKS
LAD - SECTION 3. DEFINITION AND CLASSIFICATION OF BANKS.
3.1. "BANKS" SHALL REFER TO ENTITIES ENGAGED IN THE LENDING OF FUNDS
OBTAINED IN THE FORM OF DEPOSITS.
(2A)
3.2. BANKS SHALL BE CLASSIFIED INTO:
(A) UNIVERSAL BANKS;
(B) COMMERCIAL BANKS;
(C) THRIFT BANKS, COMPOSED OF: (I) SAVINGS AND MORTGAGE BANKS, (II) STOCK
SAVINGS AND LOAN
ASSOCIATIONS, AND (III) PRIVATE DEVELOPMENT BANKS, AS DEFINED IN REPUBLIC ACT
NO. 7906
(HEREAFTER THE "THRIFT BANKS ACT");
(D) RURAL BANKS, AS DEFINED IN REPUBLIC ACT NO. 7353 (HEREAFTER THE "RURAL
BANKS ACT");
(E) COOPERATIVE BANKS, AS DEFINED IN REPUBLIC ACT NO. 6938 (HEREAFTER THE
"COOPERATIVE CODE");
(F) ISLAMIC BANKS AS DEFINED IN REPUBLIC ACT NO. 6848, OTHERWISE KNOWN AS
THE "CHARTER OF AL
AMANAH ISLAMIC INVESTMENT BANK OF THE PHILIPPINES"; AND
(G) OTHER CLASSIFICATIONS OF BANKS AS DETERMINED BY THE MONETARY BOARD OF
THE BANGKO SENTRAL
NG PILIPINAS. (6-AA)

LB RA 8791 SEC 3

2. LOANS

LAD - SECTION 37. LOANS AND OTHER CREDIT ACCOMMODATIONS AGAINST REAL
ESTATE. EXCEPT AS
THE MONETARY BOARD MAY OTHERWISE PRESCRIBE, LOANS AND OTHER CREDIT
ACCOMMODATIONS AGAINST REAL ESTATE
SHALL NOT EXCEED SEVENTY-FIVE PERCENT (75%) OF THE APPRAISED VALUE OF THE
RESPECTIVE REAL ESTATE SECURITY,
PLUS SIXTY PERCENT (60%) OF THE APPRAISED VALUE OF THE INSURED
IMPROVEMENTS, AND SUCH LOANS MAY BE
MADE TO THE OWNER OF THE REAL ESTATE OR TO HIS ASSIGNEES. (78A)
SECTION 38. LOANS AND OTHER CREDIT ACCOMMODATIONS ON SECURITY OF
CHATTELS AND
INTANGIBLE PROPERTIES. EXCEPT AS THE MONETARY BOARD MAY OTHERWISE
PRESCRIBE, LOANS AND OTHER CREDIT
ACCOMMODATIONS ON SECURITY OF CHATTELS AND INTANGIBLE PROPERTIES, SUCH
AS, BUT NOT LIMITED TO, PATENTS,

43
TRADEMARKS, TRADE NAMES, AND COPYRIGHTS SHALL NOT EXCEED SEVENTY-FIVE
PERCENT (75%) OF THE APPRAISED
VALUE OF THE SECURITY, AND SUCH LOANS AND OTHER CREDIT ACCOMMODATIONS
MAY BE MADE TO THE TITLE-HOLDER OF
THE CHATTELS AND INTANGIBLE PROPERTIES OR HIS ASSIGNEES. (78A)
SECTION 39. GRANT AND PURPOSE OF LOANS AND OTHER CREDIT
ACCOMMODATIONS. A BANK
SHALL GRANT LOANS AND OTHER CREDIT ACCOMMODATIONS ONLY IN AMOUNTS AND
FOR THE PERIODS OF TIME ESSENTIAL
FOR THE EFFECTIVE COMPLETION OF THE OPERATIONS TO BE FINANCED. SUCH GRANT
OF LOANS AND OTHER CREDIT
ACCOMMODATIONS SHALL BE CONSISTENT WITH SAFE AND SOUND BANKING
PRACTICES. (75A)
THE PURPOSE OF ALL LOANS AND OTHER CREDIT ACCOMMODATIONS SHALL BE
STATED IN THE APPLICATION AND
IN THE CONTRACT BETWEEN THE BANK AND THE BORROWER. IF THE BANK FINDS
THAT THE PROCEEDS OF THE LOAN OR OTHER
CREDIT ACCOMMODATION HAVE BEEN EMPLOYED, WITHOUT ITS APPROVAL, FOR
PURPOSES OTHER THAN THOSE AGREED
UPON WITH THE BANK, IT SHALL HAVE THE RIGHT TO TERMINATE THE LOAN OR
OTHER CREDIT ACCOMMODATION AND
DEMAND IMMEDIATE REPAYMENT OF THE OBLIGATION. (77)
SECTION 40. REQUIREMENT FOR GRANT OF LOANS OR OTHER CREDIT
ACCOMMODATIONS. BEFORE
GRANTING A LOAN OR OTHER CREDIT ACCOMMODATION, A BANK MUST ASCERTAIN
THAT THE DEBTOR IS CAPABLE OF
FULFILLING HIS COMMITMENTS TO THE BANK.
TOWARD THIS END, A BANK MAY DEMAND FROM ITS CREDIT APPLICANTS A
STATEMENT OF THEIR ASSETS AND
LIABILITIES AND OF THEIR INCOME AND EXPENDITURES AND SUCH INFORMATION AS
MAY BE PRESCRIBED BY LAW OR BY
RULES AND REGULATIONS OF MONETARY BOARD TO ENABLE THE BANK TO PROPERLY
EVALUATE THE CREDIT APPLICATION
WHICH INCLUDES THE CORRESPONDING FINANCIAL STATEMENTS SUBMITTED FOR
TAXATION PURPOSES TO THE BUREAU OF
INTERNAL REVENUE. SHOULD SUCH STATEMENTS PROVE TO BE FALSE OR INCORRECT
IN ANY MATERIAL DETAIL, THE BANK
MAY TERMINATE ANY LOAN OR OTHER CREDIT ACCOMMODATION GRANTED ON THE
BASIS OF SAID STATEMENTS AND SHALL
HAVE THE RIGHT TO DEMAND IMMEDIATE REPAYMENT OR LIQUIDATION OF THE
OBLIGATION.
IN FORMULATING RULES AND REGULATIONS UNDER THIS SECTION, THE MONETARY
BOARD SHALL RECOGNIZE THE
PECULIAR CHARACTERISTICS OF MICROFINANCING, SUCH AS CASH FLOW-BASED
LENDING TO THE BASIC SECTORS THAT ARE
NOT COVERED BY TRADITIONAL COLLATERAL. (76A)
44
SECTION 41. UNSECURED LOANS OR OTHER CREDIT ACCOMMODATIONS. THE
MONETARY BOARD IS
HEREBY AUTHORIZED TO ISSUE SUCH REGULATIONS AS IT MAY DEEM NECESSARY WITH
RESPECT TO UNSECURED LOANS OR
OTHER CREDIT ACCOMMODATIONS THAT MAY BE GRANTED BY BANKS. (N)

LB RA 8791 SEC 37-41

3. SBL

LAD -

LB -

4. DOSRI

LAD -

LB -

45